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Harbert Magazine
Harbert Magazine
Illustration of shadows of two giant people, cast over the text "Invisible Giants, The Twins of Supply and Demand"

We never see it, but it’s always there.  Big as the planet, built of iron, steel and wheels, ships and planes and automobiles, factories, farms and mines—and it never stops moving, billions of miles a year. It’s the invisible giant that we never notice, until it shows up at our front door. And delivers our groceries. 

If you never think about the global supply chain, you’re in the vastest of majorities. 

We shop so easily, finger to button, add to cart, a mindlessly insignificant act, until it’s multiplied it by a factor of billions. For no matter how oblivious we are  to the supply chain, we are also the ones who drive it.  We are the ceaseless consumers and the invisible giant dances to the tune we play. 

Which kinda makes us the other giant, doesn’t it?  The one with the demand. The one that orders and  waits and expects our consuming appetite to be met.  It’s an interesting global paradox: We consumers need what the supply chain delivers, but never think about how it gets here, much less how it all started. Which  was in the industrial revolution, as it turns out. The late 18th century when steam-powered factories took goods  previously painstakingly assembled by hand and created them en masse—less labor, less time, less cost and far greater quantities. When the new-born supply chain accepted the rudimentary task of delivering goods to consumers, the twin giants, demand and supply, began  a centuries-long conversation.

The mechanical age rushed us along with turbine and gear, war and revolution, but nothing changed the great invisible giant more than the tiny world of digitalization. In the 1960s computers began to inventory supply and forecast demand, businesses adopted industrial automation and supply chain management became a thing. New tools boosted efficiency, lowered operational costs and the fundamental frameworks of doing business  were sent skittering into the future. What more could a giant ask for? 

The internet. Earth-shattering technologies of the late 1990, showed up practically overnight and before  it knew what was happening, the giant found itself operating software as a service in the cloud. Incredible transformation. Unheard-of efficiency. So much so that three simple letters became its new prideful hallmark. JIT—Just in Time, baby—a workflow methodology  that utilized capabilities so effectively, and processed consumer orders so efficiently, that there was no need  for inventory. Order a product and the chain acquires and delivers, just in time. Amazing. Who needed stockpiles in warehouses? 

Well, when COVID hit, pretty much everyone.

Particularly on aisle 17A with the toilet paper. We, the consumer, for reasons we can’t quite explain, felt we needed a lot of it. We emptied shelves of every SKU, retailers madly reordered from suppliers, suppliers sent ships, planes and panel vans on a global scurry to factories, caught off guard factories tried to ramp up, keep the pace, fill the SKUs, seaports jammed up—but back home the problem, as consumers saw it, was that the shelves on aisle 17A were still empty. Which made us gigantically unhappy, made us indignantly wonder just who the hell was asleep at the wheel—even as the invisible giant did triple back flips trying to satisfy our need. 

Lots of chaotic things have happened to the giant in these interesting times. 

Supply chain factory workers, normally packed shoulder to efficient shoulder, suddenly had to socially distance, forcing companies to redesign assembly lines or prioritize production of one product over another to make the configuration work. 

Salesfloors, showrooms and summits where face-to-face supply chain deals got fluidly accomplished were shuttered for safety, leaving horse trading to the strange new world of Zoom.

Seaports became pinch-points, none pinchier than China. Vastly overwhelmed, shipping costs fluctuating wildly—then shipping containers ran short. Manufacturers and vendors with a single-source supplier in China had to either wait weeks or scramble to fill unfillable supply gaps.

Unfillable gaps begat unbuildable products, begat shut down factory lines, begat lost jobs, which begat historic levels of unemployment.

At restaurants, consumers could no longer consume and many were forced to close. The farmers who supplied them couldn’t adapt their produce to the appropriate package size, and labeling for grocery stores had to destroy whole crops. 

Manufacturers with tight margins saw those margins get tighter. Those with Just In Time production schedules ran short on supply when extra inventory was needed most, and JIT became LATE.

And we consumers? We needed more. We needed it sooner.  And many thousands of us, for the first time, needed groceries delivered (especially alcohol and chocolate). It seems the more shut-in we felt, the more comfort we took in placing an order—an odd-angled intersection of supply and demand where the final link of the chain, the delivery, became our only connection to the outside world. Truly a harmonic convergence of the two giants when it worked, but when a delivery failed us, our  frustration boiled and blindly blamed the invisible giant for the unavoidable perfect storm—massive instability on the supply side slamming headlong into lofty expectations on the demand.

Except, as it turns out, the giant was pretty resilient. 

Creative companies found ways to shore up weak points in the chain, software got rewritten, factory processes adjusted to account for illnesses. Manufacturers grew inventory to cope with spikes, new suppliers cropped up, abandoned malls became distribution centers, fancy-pants perfumiers made hand sanitizer, restaurants created curbside pickup and the great river of Amazon scaled even larger to reach practically every corner of the country in blue-gray half-smile vans. 

Almost on cue, consumers began to mirror the  resiliency the chain had demonstrated. We began to get a grip on what the virus was and is, settled into stuck-at-home routine and Zoom calls, adjusted to live with less and later. Expectations dropped, safety protocols formed, silver linings surfaced. And while it has been tragic and we’ve suffered incalculable losses, we’ve also stayed put (mostly), obsessed on politics, got on a first-name basis with our masked UPS drivers, and lo and behold, toilet paper returned to Aisle 17A. 

So, after all that, what now? What lessons have the twin giants, supply and demand, learned and what have they to say about recovery and the future? Here’s one thing:  It will be nearly impossible to emerge from a global disruption of COVID scale and settle in to some kind of “normal again” without first being prepared for the next one. Which is what? What’s the next one? 

The clue to that happened in February when a freak winter storm not only demolished the power grid in Texas, leaving scores to freeze to death in their homes and cars, but delayed supply chain shipment of nearly six million life-saving doses of COVID vaccine to those most in need of it. Horrible and ironic and real.

But, perhaps for the first time, there’s a real  confluence of effort and positive thinking from both sides in the realm of sustainability

The invisible giant hasn’t always been out of sight to everyone. In fact, for decades activist consumers have fired off warning flares about waste disposal, labor practices and greenhouse gases the  global supply chain produced, warnings that, on the whole, were ignored or downplayed. But a new momentum came to life with the worldwide web and visibility into corporate practices came under renewed and widespread scrutiny. 

Companies and manufacturers along the chain began to listen and respond. Corporate Social Responsibility, or CSR, now holds sway in C-suites and boardrooms.  In fact, Larry Fink, the CEO of Blackrock, the world’s largest asset management company with almost  $9 trillion worth of investments, recently sent a letter  to corporate CEOs that said this: “I believe that the  pandemic has presented such an existential crisis—such a stark reminder of our fragility—that it has driven us to confront the global threat of climate change more forcefully, and to consider how, like the pandemic, it will alter our lives.”  Larry Fink doesn’t play hunches, he’s seen data to prove it. In 2020 alone, the year COVID hit, investors sank $288 billion globally into sustainable assets, nearly a 100% increase over 2019. 

So what’s going on here? Is it possible that the ultimate silver lining to our long COVID  hunker-down is that we’ve finally learned how to check ourselves before we wreck ourselves? An esoteric idea, but there’s movement in the market that gives it teeth.

The world’s biggest companies are more often than not disclosing their greenhouse gas emissions, with 71% of companies allowing external audits of their environmental impact. 

The unexpected bonus from these audits is a detailed blueprint for identifying more sustainable ways of working, making operations more energy efficient and less wasteful. Puma, the very first company to go environmentally transparent, found ways to reduce water, energy and fuel consumption by 60%. 

Given the time it takes to ship items from Asia, more U.S. companies are looking at moving production to the Western hemisphere. Manufacturers are talking about establishing facilities here at home and encouraging their suppliers to do likewise. Doubling or tripling the size of distribution facilities would compress time of delivery.

Transportation “waste,” the unnecessary movement or double handling of parts and products, is under the microscope as well, leading companies to re-analyze their systems to find more efficiency in delivery  channels. Instead of shipping bulk orders to one  location for distribution, a new model, mailing the items to a multitude of residential addresses, is  being tested.

There’s a renewed focus on employee safety with companies now going the extra mile to realign  factories to better protect workers. 

Finally, the “Amazon model,” as we’ve all experienced first-hand, is driving our expectations, forcing more retailers to adjust their operating models to keep pace or vanish in Prime time.

So the invisible giant is going to school, learning the mantra, People, Planet, Prosperity. Efficient management of natural resources. Material recycling. Shared purpose. Doing well by doing good. And employees who work the global supply chain are less frequently asked to leave their values at the  door to do it.

And then there’s our own door, behind which we wait for the knock at the end of the chain, the answer to our demand. What have we learned through all of this? Is it possible that we’ve begun to recognize the limits to what we’ll stand for in the name of customer service and delivery times? Hard to say, but here’s a test: The next time you’re ready to add to cart, take a moment—think about what you really want, what you really need, what you really have to have—then give a good listen to your better giant.


Time to Move from Supply Chains to Supply Cycles 

Over the past century, many nations, including the United States, have experienced unprecedented increases in wealth. We have witnessed explosive growth in the middle class for developing nations that shifted to market-driven trade and competition. At the same time, the global population has increased in staggering numbers, with five billion more humans living on the planet today than a century ago.

These factors combined have been rocket fuel for economic global expansion. But is there a downside
to this surge of economic activity? Is there a cost for prosperity? 

The answer requires understanding the nature of supply chains. They include all the entities and activities required to bring products and services to market. Whether it’s a smart phone or a COVID-19 vaccine, resources from around the globe are extracted, combined and transported to create products that benefit humankind. 

Traditional supply chains were designed with a linear take-make-dispose model, with little concern for the waste created across the chain. This model leads to a primary concern: how to meet the needs of the world’s population when the extraction and consumption of natural resources is happening at a faster rate than they can be replaced. For companies, the problem is resource scarcity. When the demand for natural resources outstrips supply, prices of those resources increase. 

The answer, of course, is not to decrease economic activity. Rather, the answer is to change the model
from a linear supply chain to a circular closed-loop supply cycle. This model is designed to keep natural resources in use as long as possible, to reduce waste at every step, and to reuse and recycle what’s left back into the supply chain again. In essence, it requires that products are designed to continuously add, recreate and preserve their value along all points of their life cycle.

Change is not easy, and it won’t come overnight. But many of the big multinational companies have read the crystal ball and understand the consequences of keeping the status quo. More importantly, a transition to circular supply cycles allows humankind a better standard of living while providing companies opportunities for continued growth and profitability.

Beth Davis-Sramek
Gayle Parks Forehand Professor
Department of Supply Chain Management