Summary
Highlights
Dustin Burke opens by referencing the 1973 toilet paper shortage, caused by a joke, to illustrate that supply chain issues are not new. He emphasizes that current supply chain problems, though real, have historical precedents and past solutions. A supply chain is defined as the journey of an item from raw materials to the consumer. While some are simple, others are immensely complex, and disruptions have been frequent throughout his 14 years of experience, from natural disasters to pandemics and geopolitical instability.
Burke notes that despite media narratives about making supply chains more resilient through diversification, better forecasting, and building inventory buffers, many companies don't consistently implement these due to competing priorities and steep competition. He proposes shared risk, radical transparency, and automated recommendations as new ideas to foster resilience without sacrificing efficiency.
Burke explains that building buffers, such as extra inventory or manufacturing capacity, is an obvious solution to shortages. However, the high cost of warehousing and maintaining idle equipment makes it prohibitive for many competitive companies. He suggests an insurance-like model where industry players share the cost of stockpiling critical raw materials, components, or machinery, to be used only during crises. An example given is pharmaceutical companies sharing the cost of storing Active Pharmaceutical Ingredients (APIs) to prevent drug shortages.
Radical transparency is crucial for implementing shared risk. Burke uses the microprocessor shortage impacting the auto industry to illustrate how seemingly unrelated industries can compete for the same resources. He argues that companies need to understand not only their direct suppliers but also their suppliers' suppliers, where raw materials come from, who else buys from those suppliers, and who competes for those raw materials. A comprehensive 'supply web' map is necessary to identify vulnerabilities.
Supply chain managers are planners who analyze and interpret information to meet demand. While 'supply-chain control towers' centralize data, too much data can be overwhelming. Burke advocates for leveraging advanced technologies like data mining, AI, and machine learning to analyze vast amounts of data, predict problems, notify managers, and recommend actions. He provides an example of how a computer could have identified the risk of plastic shortages due to decreased production, natural disasters, and surging demand, and recommended proactive measures.
Burke concludes by lamenting the repeated failures in preparedness, citing the N95 respirator shortage during the 2009 H1N1 flu outbreak as a precursor to the COVID-19 pandemic. He urges imaginative thinking for businesses and governments to continuously use shared risk, supply chain transparency, and automated recommendations to build truly resilient supply chains, ultimately leading to a more resilient society.