[From iSource Business, August/September 2002] Unlike the medical, educational and economic fields, which lean so heavily on the university institutions devoted to them, the schools or parts of academia that focus on supply chain management are sometimes overlooked. But that is due to wan. Taking time to plan, research and make models of one's business options - as academics do - may have been too prudish for the pace of 2000, but in today's economic climate, that slower, more calculated way of doing things begins to look more palatable by the minute.
Truth is, the dynamic (almost combustible, we now know) duo of business and technology may need a healthy dose of academic perspective - one distanced from the pressures of profit - to help guide and temper its path into the future.
To give us some insights into the academic realm, iSource slows down and steps back with Larry Giunipero, Ph.D., C.P.M., professor of purchasing and supply management at Florida State University.
iSource: In today's business environment, how is academia supporting business?
Giunipero: Our job in academia is to help explain and define what the supply chain is and how organizations can more effectively manage it. As simple as that might sound, it is actually very complex. What I've seen in talking to practitioners is there's a lot of misinformation out there about what the supply chain is. That's both within academia and business. If you look at the Council of Logistics Management's definition for logistics, it is almost an exact replica of what a lot of people think the supply chain is: getting information and product flow from the supplier through to the final customer. But that is only a small aspect of the supply chain. When you look at how the supply chain is different from how we've defined logistics, what you find is that you have to link information and product flows with the processes. The supply chain involves linking up those various processes.
If you ask 10 people in business, "What is the supply chain?" you'd probably get 10 different answers. And you could ask people in academia and get 10 different definitions as well. For example, buyers see supply chain management as relationships with suppliers; customer service employees see it as relationships with customers. It's a matter of perspective. So somewhere somebody's got to get above all that.
iSource: Do you, as a professor, look to businesses to drive what you are teaching, or vice versa?
Giunipero: It's a blend. Certainly, we can't keep our heads in the sand. Businesses definitely influence what we teach, especially at some of the "leading edge" companies. The research we do has to interface and involve businesses. But our challenge is to look at current business practices and decide how we can improve upon them, how we can make them better, how we can model them and how can we forecast where they are going in the future. We need to know what's going on in business or else we can't really understand how to improve it.
On the other side of that, a lot of times businesses know what's going on in their companies, but they don't put it in a systematic format, outline or model. That's really our job. After you identify what the leaders are doing, then the rest of the business community is thirsty for the knowledge we've put together. We're not like the basic sciences in that we're not out there doing 10-year projection research to develop some drug. We are much more applied, and our time horizon is shorter. We have more time to think about how the supply chain may look and what alternative forms it might take.
iSource: How is the technology affecting the way you are teaching supply chain management? Or has it affected it at all?
Giunipero: It certainly has. We are emphasizing the Internet more in the classroom and getting the students to understand some of the concepts in the B2B space. They are all familiar with the Amazons and the Pricelines and the B2C sites, but they are not really familiar with companies like Ariba and FreeMarkets. So part of my job is to make them aware of what's happening in this B2B Internet space. I'm trying to spend increasingly more time on that in my courses on supply chain management. You're not going to have an effective supply chain without technology, so they go hand in hand. But I also try to teach my students that technology is not a salvation. If you have a lousy organization or lousy skill sets, just bringing in technology is not going to make it better. The processes and the fundamentals and the skill sets have to change, too.
iSource: Is there something new you are teaching today?
Giunipero: Security in the supply chain is certainly a big issue today, given all that's happened since September 11. And I certainly don't have many good analogies for that. Many consumer products firms have experienced issues of product tampering in the past. The importance of security in the supply chain is so different from industry to industry. The security in Dell's supply chain looks a lot different than the security in Eli Lilly's or Merck's, and that's one of the things I'm trying to emphasize in the classroom.
We can develop different scenarios for different business types. But right now, the only models of supply chain management are more of a plain vanilla solution that hasn't been differentiated by industry yet. In reality, you may need to take a module from Dell and a module from Wal-Mart and a module from somewhere else in order to make it successful.
iSource: What is the essential difference in the academic perspective on supply chain management and the business perspective?
Giunipero: It boils down to their, and our, basic goal. Our goal is to further knowledge so students will better understand and learn about this supply chain phenomenon. In business, they're driven by the bottom line and by how these concepts are going to help them sell products and buy in a more efficient way - they are focused on making money. Because of that, businesses often make short-term decisions. You win today's battle but lose the war, so to speak. We try to bring some balance to that. We have the luxury of sitting back and being more theoretical. We know the objective they want and we certainly want to support them in that, but we can take a less results-oriented perspective, which might prove beneficial in the long run.
The difference boils down to the fact that we're not under the gun here to turn a profit. What we're under the gun to do is publish research that is meaningful to further the body of knowledge.
iSource: How well do you think companies are managing their supply chains?
Giunipero: I think they're struggling. You do have the Dells, GEs and Wal-Marts of the world that are the leaders and are doing a great job in this area, but most companies, and top managers, are struggling to understand the value chain. For example, just look at how many of the high-tech companies had to make inventory write-offs after September 11. That tells me that there must have been a lot of inventory in the supply chain.
In addition, with the recession, companies are cutting back their IT spending and resources and not investing in technology and process re-engineering. That's short-sighted. If they want to improve the supply chain, they're going to have to invest in it. IT spending is down. You can see that reflected in companies like i2, where they are not seeing the revenue streams or growth they expected.
iSource: What do you see in the future of supply chain management?
Giunipero: Two things come to mind, and the first is integration. Integration issues are talked about all the time. It's a difficult issue because there are pressures on businesses to make that next quarter number. There is no other integration effort that effects a company more than supply chain management because it effects you internally as well as externally. SCM should be the hot topic in the future because there is a lot of frustration out there.
Second, we are going to see more emphasis placed on the virtual supply chain. It's not going to come in the next year or two, but I think people are going to start thinking more about the possibilities there. Of course, developing virtual supply chains and gaining visibility into all of your supply bases to some degree is going to be driven by the integration tools. It's kind of a chicken and egg thing. If we can learn to integrate then we can start learning to build virtual networks that allow sharing of information between companies, as opposed to private networks.
iSource: Do you think we'll ever get there?
Giunipero: I think so, although the technology will probably get there before the trust. But if people can learn to trust their business partners, we can create what is essentially a sub-Internet. It gives so many people access to information - imagine all the efficiencies gained by that. That's pie-in-the-sky thinking right now, but that's what academia has to do - provide that thinking and that vision.