Tag: Olin’s Supply Chain & Operations Association . OSCOA

Because of the worldwide havoc of the coronavirus, supply chains have become a crucial new focus of the global economy. Sergio Chayet, director of the Operations and Supply Chain Management MBA platform at Olin, foresees changes ahead in several areas including making workers safer and strategies to guard against future massive stresses on supply chains.

“There is a new appreciation for retail store employees, factory workers and workers in logistics and transportation, energy, health care, education, and other industries responsible for sustaining life during shutdowns,” he told Bloomberg recently. (See “How supply chains jumped from business school and into our lives.”)

“Just like September 11 brought permanent changes to airport and port security, it is likely this latest crisis will bring permanent changes to operations and supply chain risk management as it pertains to mitigating worker health risks and establishing contingency plans to protect them.”

Would it be better for companies to produce from geographically diverse places or from one particular region?

“Having a geographically diverse footprint and carrying excess capacity is always valuable as a real option, since it allows firms to react to a wide variety of risks (social, political, macroeconomic, etc.) by shifting production to the most convenient location on short notice  with changes to the global economy.

“But such excess capacity is costly and must be justified by being exceeded with the real option’s value. A complementary strategy, when feasible, is having flexible contracts with supply chain partners. However, when several correlated risks happen in quick succession, partners will be unable to honor those flexible terms.”

What lessons are we now learning about supply chains?

“Over the last couple decades, driven by price and time competition, supply chains have evolved toward becoming leaner and more responsive, resulting in lower production and transportation costs. Reduced trade friction and international arbitrage opportunities in the form of wages, total cost, exchange rate, access to talent and raw materials, and other differences, has led to ever more global supply chains. Containerization, larger vessels and ports, and warehousing innovations have all contributed to lowering logistics and transportation costs.

“As a result, consumers have had access to unprecedented levels of product variety at low prices.

“But lean supply chains are more susceptible to disruption risk, and have to rely on excess capacity or being nimble in integrating new partners into them.

“When the crisis started, all eyes were on China, and organizations were evaluating contingency plans to mitigate risks affecting that portion of their supply chains. In the midst of companies evaluating those contingency and reactive measures, the crisis started to become more severe in Europe and subsequently in America, rendering many of those options obsolete.”

What’s an example of a situation that may not have been considered in the past?

“The demand shocks many retailers have experienced for commodity products. Some understandable, such as face masks, hand sanitizers and general purpose cleaners, and some less understandable, such as toilet paper.

“The familiar bullwhip effect in supply chains—driven by information and product lags, independent decisions by channel partners, and low levels of demand variability—has been overshadowed by unpredictable shocks to end-consumer demand.

“Take toilet paper: Because it’s a commodity, manufacturers have little influence on market prices. To be competitive they must control costs and usually rely on high levels of automation, low levels of labor and high-capacity utilization, with plants running 365/24/7. They can maintain high utilization only because of predicable demand, with low uncertainty and no seasonality.

“Such an unpredictable spike in demand—likely driven by a vicious cycle of panic purchases and perhaps some speculators planning to make quick profits in secondary markets—quickly depleted most of the channel’s inventory. With no excess capacity, we can expect a lag until those products are back on the shelves, which will probably be followed by more panic purchases and secondary spikes. Eventually, with so much forward buying, those supply chains will experience excess inventory.

“Interestingly, once consumers started their lockdowns, their demand for these commodities increased to supplement what they had previously used from supply chains serving the commercial market. For example, in addition to their use at home, consumers used toilet paper at offices, schools, restaurants, malls, etc. This has further strained consumer supply chains and will further delay the time it takes for manufacturers, distributors, wholesalers and retailers to replenish inventory to the new necessary levels.

“Because in several industries supply chains that serve the consumer and commercial markets are different (For instance, commercial toilet paper roles don’t fit residential toilet roll holders.), lockdowns have also created both shortages in consumer supply chains and surpluses in commercial ones. But simply shifting one to the other isn’t feasible, at least in the short term.”

Will the coronavirus change the study of supply chains?

“In supply chain risk management, planners start by identifying and assessing possible risks, which are classified according to their probability and anticipated impact. These are called foreseeable risks, and are managed proactively. Relatively likely risks should be mitigated by measures designed to lower their probability or impact before they happen. Because of limited resources, less likely risks are best managed by contingency measures, which are planned ahead but only triggered after the risk happens. Remaining risks are called residual or ‘unknown unknowns’ and can only be managed reactively. The only proactive measures for those are setting aside time, resources and flexibility to be used once the risks are known. 

“When major unknown unknown risks were modeled in the past, they were usually assumed to happen one at a time and independent of each other. COVID-19 turned out to be an unprecedented set of unknown unknowns all happening in rapid succession, including: A highly contagious pandemic, which quickly traveled across continents, sharp economic downturn globally, a large portion of the population under lockdown, etc.

“In the future a global pandemic of this magnitude will not only be a foreseeable event, but also will likely change how we model unknown unknowns. And depending on how likely similar pandemics are expected to be in the future, a whole slew of mitigation and contingency measures are likely to be considered.”

How long can supply chains withstand shock?

“When either demand or supply are affected, predicting how long supply chains can withstand a shock depends on the severity of the shock, the length of the disruption, and specific factors to each industry.

“What’s interesting about the current situation is that both supply and demand are being affected simultaneously. An important new factor determining the resiliency of each supply chain will be the relative changes in their supply and demand.

“A slowdown in economic activity may end up making it easier to restart some producers, in particularly those who will be able to operate with low overhead and be able to scale as demand picks up.”

The Supply Chain and Operation Symposium on November 29 brought powerhouse panelists to Olin Business School. The student event was coordinated by Olin’s Supply Chain and Operations Association (SCOPA) and sponsored by the Boeing Center for Supply Chain Innovation (BCSCI) and Olin’s Weston Career Center.

The four panelists, exceptional leaders from World Wide Technology, Monsanto, Eaton, and Caleres, described how the work they do contributes to their organization’s value chain. Students were encouraged to be courageous, innovative, vulnerable, and to stay humble. It was a tremendous learning opportunity for all who attended!

About the panel

Mike Taylor, Vice President of Information Technology, World Wide Technology

As Vice President of Information Technology, Mike is responsible for all information technology functions that include business applications, IT governance, architecture, infrastructure, and core Advanced Technology Center operations.

Marcelle Pires, Global Supply Chain Director, Monsanto

Marcelle is a 18-year employee with Monsanto Company. She joined the company in Brazil and has worked primarily in Manufacturing and Supply Chain Operations, including roles as Manufacturing Manager, Supply Chain Manager in the Chemistry and Seeds businesses.

Carlos Alberto Valdez, Director of Operations for B-Line, Eaton

Carlos has worked in the industry for 23 years and currently is responsible for Eaton B-Line Business Operations, consisting of seven manufacturing sites in the U.S. and Canada, in addition to a site in Saudi Arabia.

Natacha Alpert, Innovation Lead, Caleres

Natacha has been in the footwear and apparel industry, working creatively for iconic brands, for the past 14 years. She is currently the innovation lead at CALERES, serving 9 of their brands in the corporate portfolio. She previously held global positions at Nine West, Dr. Marten’s, Miras3D, Timberland, and Reebok.

Guest Blogger: Laura Hollabaugh, Academic Advisor, Graduate Programs

What happens when the sustainable agriculture company Monsanto and Washington University’s Olin Business School partner to create an exceptional developmental experience for graduate business students?

You get the Monsanto Olin Case Competition (MOCC), an opportunity for ten teams from across the country to come together for the third annual competition on Feb. 8, 2018. Through an affiliation with Olin’s Boeing Center for Supply Chain Innovation (BCSCI), this year’s case will challenge participating teams to present thoughtful and strategic solutions to a global supply chain and technology management problem. The student leadership from Olin’s Supply Chain & Operations Association (SCOPA) has already proven invaluable.

Participation in the case competition will include a tour of Monsanto’s Chesterfield campus, a panel, and a reception on Tuesday, February 7—a great precursor to the next day’s competition. Prize money will be $10,000 for first place, $5,000 for second place; and $2,500 for third place.

Teams have until December 11, 2017, to register and submit Round 1 materials. For more information, go to www.olin.wustl.edu/mocc. For questions, contact MOCC@wustl.edu.

Organized by:

Amazon hosted 20 MBAs from Olin for a peek into the tech giant’s logistical prowess on September 23. It was a pleasant morning as the spirited MBAs from Olin departed from the Knight Center for a 270-mile journey to SDF8, one of Amazon’s largest fulfillment centers, located in Jeffersonville, Indiana. The tour was organized by Olin’s Supply Chain and Operations Association (SCOPA), in collaboration with the Weston Career Center and Amazon recruiting.

As the bus rolled into Amazon’s parking lot, the driver exclaimed, “This is the biggest building I have ever seen!” The facility was an imposing structure, five stories high and occupying an area equivalent to 21 football fields. The excitement in the bus was palpable as we prepared to witness the magic that happens after people across the globe hit the “Place your order” button on the Amazon website.

An Amazon fulfillment center.

An Amazon fulfillment center.

Our group was welcomed with a one-hour guided tour of the fulfillment center. The tour consisted of a walk-through of the different functional areas within the fulfillment center, while the site was limbering up for the upcoming peak holiday season.

It was an amazing site to witness how millions of orders were being tracked so efficiently with man and machine working like clockwork to deliver the best value to the customer.

The highlight of the trip was the information session led by the Director of the facility, Mr. Sunender Mann. The students got an excellent perspective from the site’s leadership team on what it’s like to lead and inspire people every day and while serving millions of customers across the globe.

The students were thoroughly impressed with what they saw. They couldn’t hold back their excitement when they were asked by other students back at Olin about the experience.

Students walked away eager to come back to Amazon as employees and add value to lives of millions of customers using the skills they will acquire through the MBA program at Olin.

What students were saying:

“Visiting Amazon’s fulfillment center was an amazing experience. I had expected the facility to be modern and futuristic but once we got there, the scale of SDF8 really blew me away. On our guided tour we got a first-hand view of the automated delivery system that speeds packages around the building’s packaging machines that allows Amazon to efficiently handle the huge volume of goods that pass through the building every day. Meeting SDF8’s friendly management team also provided us with key insights into the working of the fulfillment center.”

– Rohan Kamalia, MBA ’18

“I was impressed by how well-coordinated such a massive facility could be–everything from low-tech to ultra-high-tech solutions were used to maximize the efficiency of the process. The managers with whom we met were very generous with their time, sharing with us their thoughts about being leaders of such a large and well-oiled operation. My biggest takeaway from the meeting was how they stressed building strong relationships with their teams as a necessity for achieving such high performance.”

– Jeffrey Lantz, MBA ’18

“It was truly a great opportunity to learn about Amazon. Through the Q&A session I came to know more about the Pathways program. Furthermore, its individual inventory management process was so impressive. I worked on several supply chain management projects for global manufacturers, but I haven’t seen such an innovative SCM process as the one Amazon has.”

Jinsoo Chang, MBA ’18

Guest Blogger: Abhishek Sahni, MBA ’17

Supply chain students at SCOPA Symposium.

On February 25, the Olin Supply Chain and Operations Association (SCOPA) held its second annual symposium at Knight Center. Seven Olin alumni and industry experts from Deloitte, Accenture, Equifax, Express Scripts, and BJC Healthcare joined a mixed group of 33 students in the MBA and Master of Supply Chain and Customer Analytics programs to discuss the topic of ‘Big Data Analytics in Supply Chain & Operations.’

The topics that we discussed included the definition of big data in various industries, types of big data, the IT implementation and human resources support, the use of big data in real-world business and lastly, the soft and technical skills students need to learn before going into the advanced data analytics field. The discussion was very inspiring. We were not only able to gain industry insights first hand, but some of us also discovered career opportunities and even potential business opportunities among participating companies and students’ employers.

Panelists speak at the 2016 SCOPA symposium.

Panelists speak at the 2016 SCOPA Symposium.

The symposium was very successful. Both the students and the panelists believed that it was a great learning opportunity. After the event, the panelists from Deloitte explicitly expressed that they would love to come back next year to meet more students and provide more learning and networking opportunities. Events like these makes them even more interested in our talent here at Olin.

Last but not least, I want to express my special thanks to Mark Schlafly, Karen Heise and Lisa Hebert from the Weston Career Center and Sally Michael from the Management Communication Center. The event would not have been this successful without their huge support. At the beginning of the preparation stage, we experienced some difficulty inviting the right industry experts. Karen and Sally even generously shared their personal contacts to help SCOPA with the event. This is a great example of the collaboration among WCC, MCC, and student organizations. Olin is really a place where everyone truly cares about your success. You know you could always get genuine support from this close-knit community.

Moving forward, SCOPA plans to maintain and expand its network with companies. We hope to host another symposium in the Fall semester when most students are looking for internship/full-time opportunities, and organize more Lunch & Learn opportunities.

Guest blogger: Joyce Song, MBA ’17