Why should supply chain be considered during the product design process? Omera Khan explains
Omera Khan is a renowned Strategic Supply Chain Risk Expert and current Professor of Supply Chain Management at Royal Holloway. In recent years, Omera’s white papers have dived into a plethora of key supply chain issues, from information flow to skill requirements as well as future retail and ecommerce models.
However, it is the findings in Omera’s 2018 text ‘Product Design and the Supply Chain: Competing Through Design’ that have arguably flown under the radar of some design and supply chain leaders.
Ahead of Omera’s speech at the recent Alcott Global ‘Makers and Movers’ conference, we sat down for a chat to learn why design and supply chain should be inherently linked. We also discussed some of the other pressing issues covered in Omera’s aforementioned white papers.
Hi Omera, thanks for taking the time to speak to us.
In your White Paper, ‘Supply Chain Skills for the Future’, you look into the type of skills that will be required among new supply chain professionals in years to come. Given that the new generation of professionals have grown up under more digitalisation than ever before, do you think there could be a glut of social and interpersonal skills among post-graduates – especially as a result of the pandemic and the drive towards online learning?
I think that’s a really good way to frame the question, talking about the different generations. I feel we’re seeing a reversal of a trend now.
I’m a 70s kid, so I didn’t actually have a mobile phone until I went to University. We did nothing online; I did a textiles degree and the first experience I had of anything digital was when I had to go to the computer lab room and learn the new thing at that time, which was CAD [computer aided design].
So we had to research in the very traditional way of scouring material, going to the libraries and sitting there for hours on end finding information. We would literally have to go into the field and do field-based research by speaking to people, which I would say, in those days, helped us to develop the ability to improve on our communication skills, or improve on how we connect, because there wasn’t a thing called email at the time.
It was tougher to reach out and find the individuals or the experts that we wanted to speak to. I think there was a different level of analytical skills, problem solving skills, communication skills, and a certain level of maturity that we had to develop when we were only in our 20s or maybe even younger, to do things like field based research and fulfill the outcomes of our degrees.
Now, what I would say is that we’ve seen a complete switch on that. Young people now are digital natives and have accessibility at the touch of their fingertips. It is almost taken a bit for granted in some way.
I don’t remember really having all of that. Maybe it was there, but I didn’t know how to access it at the time. However, where we had to naturally develop, I see those skills lagging in the same age group today.
Whilst the current generation of students might be superior in the classroom in terms of fixing technical problems, for instance when I’m stuck trying to put my PowerPoint slides on the screen during an online class, I would say their problem solving, communication, and negotiation type skills are poorer.
What we’re having to do, I think, in our curriculum, is to be a bit more innovative and find ways we can actually incorporate those kinds of elements when we’re teaching logistics and supply chain.
I think something like the supply chain game, or the beer game as we call it, is one such way of trying to get people actually sitting next to each other, working as opposed to clicking on a dashboard or whatever. That way people communicate and solve problems physically in a classroom.
So there has been a little bit of a reversal whereby we have to naturally develop those skills. I think we’re lagging behind in it because we seem to have thought that technology skills alone are enough for most. Yes, technology skills are very much needed because technology has taken over a lot of spectrums of our lives. But I don’t believe it’s enough.Technology aids what we do and certainly aids a supply chain professional, but I don’t think that that can completely replace all the soft skills that we also need.
There seems to be a bit of a lag or a bit of a void in how we’re actually developing the future supply chain professional. I’m seeing it because I’ve got one foot in academia and one foot in industry. There seems to be a disconnect between graduates today and the task of making them a good fit for organizations that require a professional that is more of an integrator, more of an orchestrator – someone who has a wide variety of skills, not just the operational and research skills, but an understanding of the complexity in supply chains.
Everything is not fixable or searchable at the touch of a button. You need to talk about things and master the ability to negotiate, so you need persuasion skills.
I grew up in a business family. So from a very young age I was on the factory floor and in production and supply chain before I even knew it. I went to trade fairs with my family. I was negotiating with suppliers and doing business deals when I was 12 years old. I’ve been in the field for a very long time, and naturally developed those skills.
So when I went on to do my undergraduate, I probably had a head start and the confidence to reach out to experts and people in industry than my colleagues did. I think those skills are somewhat lost today, because many are ‘only’ online or searching things without really doing the actual hands-on, practical and physical stuff.
Three years ago you released the book ‘Product Design and the Supply Chain: Competing Through Design’, which covered the importance of incorporating the difficulty of supplying components of a product into the decision making process regarding design. To what extent have the events since then made this more important, and are you seeing real world examples of companies and designers taking on board the ideas in the book?
I think this question is relevant and so timely given the whole debate on COP26 and climate change and so forth.
The main crux of the book is understanding that the supply chain begins on the drawing board. What I mean by that is recognizing that we can de-risk our supply chain at the very earliest stages of design.
What over 15 years of my research has shown me on the subject is that design is often managed in isolation to the rest of the supply chain. However, there are key decisions that we need to take regarding design and supply chain, i.e. what is the true life cycle cost of this design through the supply chain? How complex is the product that we’re designing through the supply chain?
Looking at it from a sustainability perspective, which was one of the chapters in my book, the materials that we use are key, as are the sourcing options and the arrangements that we use. We even make decisions on resource efficiency of the product or even the packaging. How transport intensive will this product be? That’s another important question.
We don’t consider these decisions that early on. We rarely consider it because we don’t align product design across the concept to delivery process. So we have a supply chain, that is dislocated from the design process. To me this makes no sense, we need to integrate our supply chain process with design.
In the book, what it argues with supply chain risk management is that if we actually manage the product design process better in our supply chain, we can strategically manage our risks better. We can mitigate supplier related risk, we can mitigate demand related risk, as well as external risks.
A lot of this actually starts by not just looking at the aesthetics or the ergonomics of the design of the product, but also things like the materials, sourcing locations and the complexity that’s involved in making a product design.
If we look at the fashion sector, for example, it needs to be highly responsive. Zara is a great example of a company that is very design led, a little bit like Apple is very design led. But the interesting element is how they use design at the heart of their supply chain, for example at Zara the designer do not have a free run at design its simply not possible to create any design and then have it produced to meet their 14-day to store lead time, their designers are constrained to design to fabric capacity to achieve the incredibly responsive supply chain. At Apple innovation in design has been key to its success for example the Corning glass touch screen which became iconic.
So what I argue with the product design point in my book is that by aligning product design with our supply chain, we can improve our agility, we can mitigate supply risk, we can increase our resilience, we can manage complexity, and also manage sustainability.
I think it’s probably the only book linking product design and supply chain in the marketplace. Traditionally, the topics have been discussed at length separately. There are thousands of books on supply chains and thousands more on new product development and design. That’s not to say design is never been mentioned in supply chain, it has but not in the level of detail that i describe in my book.
To answer your question though, is it relevant today? Or is it even more relevant? I would say absolutely! Amid the debate on how we reduce carbon emissions, we can certainly start considering the materials we choose when we’re making a product, the locations we choose and where we’re sourcing the materials from, as well as transportation modes and aspects like that. We need to look at how we can remove so much complexity from the design of a product. I think these kinds of decisions need to become a lot more important today.
What the book will help managers to do is actually take this a bit more seriously. They can understand that through product design, we can actually be a bit more carbon neutral, or reduce environmental risks but designing the product differently. Each chapter that focuses on a key aspect of risk, agility, sustainability all have a useful checklist for design and supply chain professionals to take away and consider at the ‘drawing board’!
We must consider how to support reskilling our teams i.e how we can inform our designers to design more sustainably. And supply chain and procurement professionals to consider design implications. We are used to talking about design for assembly and design for manufacture, but we need to talk about design for sustainability, or indeed design for planet.
If we think about design for sustainability, what that’s asking the designers to do is to understand the implications of the product design, on supply chain cost, on supply chain complexity, supply chain responsiveness, all of those factors.
The problem we’ve got is, to my knowledge, there is no curriculum out there that teaches product designers the implications of logistics and transport. Neither is there an operations management supply chain or logistics curriculum out there that teaches supply chain professionals the significance of product design, and the role that product design plays in the supply chain.
My book is full of checklists for both supply chain professionals and designers. What I’m really highlighting is that they need to come closer together and integrate both of these functions as a process.
It seems such a logical thing to do, taking into account supply chain aspects during the design process. One would expect this to be the norm nowadays, yet I get the impression that this is not always the case. Why do you think this is?
The challenge is that most businesses, I feel, are still operating with business models that they designed 30-40 years back or maybe even longer – could be 50-60 years back. They’ve got legacy business models, they’ve got legacy solutions and approaches to things.
Whilst COVID, in some ways, has been a catalyst for recognizing that digital technologies is something we need to do and we are doing things in different ways, there’s still a resistance to change the status quo.
I think we’ve moved from a world which was relatively stable to today’s globalized and more uncertain and turbulent world, where things are changing so much – we have heightened geopolitical issues, we have a high level of nationalistic views, and yet we’re still holding on to these business models, or these legacy solutions that we’ve created, as if that must still be the base of what we do in our business.
Rather than actually trying to think about developing a new approach, I think companies like Ocado, for example, or Amazon, are great at constantly reinventing themselves. They’re quite disruptive in that they innovate themselves all the time. I don’t think they get complacent and stuck to an approach. If you think about it, they took physical to digital to go back to physical. The grandmasters are reinventing themselves.
Many things are common sense and logical. After the volcanic ash cloud, you would think that many businesses would start thinking a bit more flexibly and agile in their practices. But they didn’t.
When I do keynotes and published material, I feel like we’re still talking about the same things. The only way I can understand why things haven’t changed in the 20 years that I’ve been in the profession is that I often find it’s a bit of a mindset or an attitude thing. Many times I feel some CEO’s and senior leaders are looking for the magic button, the quick fix that will become their legacy. Well it doesn’t quite work like that anymore, particular in our supply chains which are dynamic and constantly changing and reshaping we need more dynamic leaders that are not simply looking for a quick fix but are providing the dynamic leadership for their dynamic teams. Encouraging and rewarding curiosity and creativity and reskilling when and as required.
They’ll say to you, “Oh, this is all great what you’re presenting there, but can you just tell me where the magic button is that I can press to make normal problems go away?” Well, there is no magic button. One company’s supply chain risks are different to another’s; Coca Cola’s supply chain risk will be different to BMW’s.
The problem can be the same, like COVID, but the challenges and the disruptions that it will inflict, as well as the impacts of those disruptions, will be different and have to be managed differently.
If we have flexibility in the structure of our business and the structure of our supply chain, if we have options, it helps us to be more flexible and resilient to the changing tides and shockwaves, we need bandwidth in our supply chain, the ability to collaborate horizontally and vertically and so on. Like I said, these are things you talk about a lot.
I understand it’s not easy to implement, but many are resistance to change and hold on to legacy solutions which brings with it latency and complacency. I think the resistance is that it’s the leaders who make the decisions who may not have the complete picture on whats going on on the ground. They get comfortable in their ivory towers. Perhaps I’m being a bit provocative here, but there’s soldiers running on the ground that are trying to manage all the disruptions, but have no say in the way we do things.
They can’t say, well, maybe we shouldn’t just be just-in-time or lean, but also have a bit of agility. Perhaps we need to invest a little bit more in capacity or whatever – it’s the leaders that make those decisions and often those decisions can come late.
The pandemic has ultimately seen more focus on supply chain resilience. However, do you feel this attention in the discipline will be permanent or just temporary?
I think it was 2004, my opening line in my PhD thesis was that we should no longer be talking about supply chain management, but supply chain risk management because every decision we take has embedded upside or downside risk in it. What I was saying is that ultimately we should be talking about resilience.
I think the notion that folks have that resilience costs is an incorrect one. I think that’s what often prevents firms from recognizing the benefits of developing a more resilient culture, a resilient mindset, and a resilient organization. I don’t believe things will ever settle down; there will always be disruptions in our supply chains, because we’ve designed our supply chains in such a way they’re not just down the road anymore. They’re global, they’re interconnected. They’re complex systems.
So if there’s a blip somewhere, because things are so interconnected, it will have an effect somewhere – it could be semiconductor chip shortages for example. In the case of Toyota, which some say has the most reliable supply chain in the world, even though they built up so much capacity once upon a time, they then had to reduce production by 40-50% quite recently because they had run out.
So global supply chains are interconnected and we have to design resilience into our supply chains. I don’t think we need things in the atmosphere and the wider environment to calm down and thus we don’t need resilience.
Of course we need resilience, because most supply chain risks occur because of systemic changes in our supply chains – It’s not just about things that happen in the wider environment, although they do have massive impacts. Black swans or white rhinos, whatever you want to call them. It’s actually through our own decisions that some of the biggest blips and risks happen. Therefore, we do need resilience as a prerequisite to actually manage our supply chains.
I also feel that now that we are being forced into developing more sustainable supply chains, sustainability and resilience are interlinked. By developing a more sustainable supply chain, we will achieve more resilience and vice versa, by developing more resilience by default, we will also be more sustainable.
There will not be a future in the supply chain that doesn’t need to plan for resilience. What we need to do is be smarter in our supply chains and develop methods where as best we can, we are efficient on most days but we are always effective.
We have the structure flexibility in our system, that when that time comes to be snapped, we dont snap. We have the ability to use resilience like a generator to kick start things again and come into action without being impacted.
So I think we all need to design for resilience. Yes, we have smaller companies and startups that can take risks and can be more agile and adapt more quickly, but that’s an exception not the rule.
Another of your white papers concerned information flow and how it can be harnessed to bring huge efficiency gains to supply chains. In recent times there has been no shortage of discussion on data sharing in the logistics industry. However, one of the barriers appears to be that although many companies talk a good game when it comes to data sharing, some may feel they have more to lose than gain by sharing data – particularly if they feel their data pool gives them a competitive advantage. Are you confident that we will see sufficient data sharing in the future?
Good question, a difficult one to answer in some ways.
I have two different views on it. My first viewpoint on it is that I feel that in supply chain, information is everything. In fact, I think information acts as the arteries of a business.
I understand that from the corporate side, there’s proprietary knowledge or folks that have invested a lot of money and time in information. But if I put my academic hat on and we think about streamlining our end-to-end supply chain – taking the extended enterprise viewpoint and considering our supply chain partners as our partners, we can recognize that the benefits of actually sharing the information that needs to be shared is vital. It’s key as it is the arteries of the business.
We have a lot of web based technology firms who offer collaboration tools to share information and so on. I think going forward, firms might become more accepting of sharing information.
Part of it will come down to your very first question, Greg, about the new generations. When this younger generation of digital natives start entering into management level positions where they make the decisions, I think they’re going to be less anxious about sharing information than the generations before. Again, I think it’s something about psychology. The mindset of the individuals who are entering a world where digital information, digital sharing, and so on, is a lot more comfortable than the generation before.
Going forward, we will see increased levels of information sharing. But the downside of that is that we will also see a higher risk of cyber warfare and cyber security issues too. Whilst information sharing is vital in supply chain management and were using greater technologies it has also exposed us to greater vulnerabilities in our supply chain as well, because hackers are often more sophisticated than the folks sharing the data in the first place. Many years ago, I did some research on cyber resilience in supply chains. I remember one of the first papers I published on cyber risk and resilience in the supply chain, when it was hardly discussed at all at supply chain symposiums or academics. So the initial response was cyber sounds good Omera but whats it got to do with supply chains? I knew then, just like my research on design many years earlier that this disconnect was worthy to investigate further.
I think we might also get a bit more sophisticated and stop chasing buzzwords like blockchain and so on. I was never a big fan of that in the first place. What I hope is that in the next 10 years or so, we start to see a bit of a rationalization of buzzwords and terminologies.
There’s a lot more data out there that is unnecessary. There’s a lot of data that we have to sift because there’s so much data. So I don’t think we’ve necessarily helped ourselves either by the amount of data that’s out there, or the many buzzwords. We need to find ways of being a bit more sophisticated with the data we share, and how we extrapolate the right data from all of the data available, and stop running to all the shiny buzzwords.
Lets keep it simple. Supply chains are already complex systems. Our role in the profession must be to ensure how we design supply chains to be kinder to the planet. We will all profit from that for generations to come.
Omera Khan was speaking to Trans.INFO before her appearance at the recent Alcott Global Makers and Movers virtual conference. Trans.INFO would like to thank both Omera and Alcott Global for making the interview possible.