Category Supply Chain Advantage

During the past forty years the number of consultants has grown worldwide. More organizations use consultants and the global industry is worth $250 billion. There is a symbiotic relationship between Business Schools and Management Consultants that maintains a steady supply of fresh graduates to a growing industry. An interesting question is to ask what role management consultants play in adding value to organizations in both the public and private sector.

The 'Big Con' describes the confidence trick the consulting industry performs in contracts with hollowed-out and risk-averse governments and shareholder value-maximizing firms. It grew from the 1980s and 1990s in the wake of reforms by both the neoliberal right and Third Way progressives, and it thrives on the ills of modern capitalism, from financialization and privatization to the climate crisis. It is possible because of the unique power that big consultancies wield through extensive contracts and networks – as advisors, legitimators and outsourcers – and the illusion that they are objective sources of expertise and capacity. To make matters worse, our best and brightest graduates are often redirected away from public service into consulting. In all these ways, the Big Con weakens our businesses, infantilizes our governments and warps our economies.

Conflicts of interest can be problematic when organizations employ consultants. It is necessary to ensure that any conflicts of interest are declared at the outset before work is done. We have seen during the Covid 19 Pandemic that many contracts handed out by the UK Government suffered from a lack of scrutiny bypassing normal processes  in an effort to speed up action. This increased costs and some contracts given to management consultants were excessive. £600 million spent on this. Much of it on Track and Trace. In addition much public money was wasted on Personal Protective Equipment contracts given out in grace and favour to those in the loop.

If you want to work in management consultancy then a degree at Business School is a starting point often the MBA. Business Schools will tell you about all types of tools and techniques to add to your toolkit. such as Motivation Theories, Theory x and Theory Y, Teamwork, Business Process Re-engineering, 7 S Framework, Lean Thinking, Agility, Flexibility, BCG Growth Share Matrix among many four box strategy models along with Porter's Value Chain Analysis, Five Forces and many other management fads. The problems emerge when the novice management consultants decide to put them into practice without sensitivity to context and specifics of the problems.

Here we take a look at the role of Business Schools in developing the supply chain for the management consulting industry. Drawing on some critical commentators such as Locke and Spender 'Confronting Managerialism'.  The failure of management is explored in this book. Another contribution comes from Duff McDonald in 'The Golden Passport'. Henry Mintzberg wrote a book 'Managers Not MBA's' which makes some telling points about the nature of MBA's in Business Schools.

So what do you think? Have firms devolved their responsibility to manage by employing an ever-growing army of management consultants? 

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In this Easter Special Edition Tony Hines takes a retrospective look at all things impacting global supply chains and identifies some key challenges for supply chain managers and the C suite.

Many factors have disrupted global supply chains including:

• Geopolitics
• Inflation
• Energy Price Increases
• Climate change and droughts
• Shipping costs and container box prices
• Covid 19 pandemic
• Disruptions continue to impact global supply chains
• Ports under pressure with delays and strikes
• Trade wars between US and China
• Threats to supply chains from cyber attacks
• US policies aim for resilient supply chains and the notion of friend shoring
• Costs and risks moving to EV's and China's leading position in controlling mineral resources along with their processing capabilities give the country a leading edge in shaping the new automobile market.
• Retail supply chain costs have risen and average inventory levels are much higher
• Russia invading Ukraine and the grain shortages that followed
• Food shortages due to many factors including climate change, droughts, and Brexit have caused empty shelves in the supermarkets. 
• Labour shortages and skill gaps emerged in the UK and Brexit made matters worse. This impacted food supply chains with shortages of workers to pick and harvest crops.
• Inflationary pressures have brought strike action as workers seek to get higher wages. 
• Energy prices have gone sky high and many businesses may decide enough is enough and some already have.
• Brexit has posed many challenges for the UK with the Northern Ireland Protocol, worker shortages, supply chain frictions, additional costs and extra paperwork which has added to the problems of inflation for the UK.
• Energy, food and water security are some of the big challenges.

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In this episode Tony Hines takes a look at superforecasting and AI and how it will change and impact the supply chains of the future.

Super in this sense means better.  According to Phillip Tetlock superforecasters consistently make better predictions.  They do this avoiding bias, updating as new facts emerge and through their cognitive processes.  We examine how forecasts can be better by examining practices and processes used by superforecasters.

There is much potential to employ skills to make better supply chain decisions adopting approaches discussed.

Artificial Intelligence (AI) and machine learning also offer ways to combine human and computer technologies to improve supply chain management by improving predictions that impact business.

Further Reading:
SCHOEMAKER, P. J. H., & TETLOCK, P. E. (2016). Superforecasting: How to Upgrade Your Company’s Judgment. Harvard Business Review, 94(5), 72–78.

Superforecasting: The Art and Science of Prediction, by Philip E. Tetlock and Dan Gardner, Crown Publishers, a division of Penguin Random House LLC, New York, New York, ISBN 978- 0804136693

Power and Prediction. (2023). Developing Leaders, 40, 212–214.

Power and Prediction – The Disruptive Economics of Artificial Intelligence, co-authored by Ajay Agrawal, Joshua Gans and Avi Goldfarb, HBR Press (Nov 2022) 9781647824198 (ISBN10: 1647824192)

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All things impacting global supply chains this week.

• Cause for concern that inflation is driving the movements in the banking sector at present. Two recent regional bank failures are at the mercy of central banks as they try to dampen inflation. Last week interest rates increased by 0.25 per cent.
• GlenFlat has created solutions to lowering cost of moving empty containers
• AI concerns have been raised and there are calls to halt experiments with AI. Of course if this happens in the US or Europe there wil still be experiments elsewhere in the world.
• Cyber attacks on supply chains are back in the news this week.
• British supermarkets have been defrauded by suppliers labelling contaminated meat as British when its country of origin is elsewhere in South America and Europe.
• The UK strikes an Asia Pacific trade deal with 11 countries.
• The spat about microchips between the US and China continues as China claims it could be threatened from the importation of US microchips which present security risks for China according to the Cyber Security Administration in China. Similar claims have already been made by the US about Chinese microchips. Micron is the US company impacted by the claims.
• Environmental Protection Agency (EPA) says 50 per cent of trucks will be electric by 2035. Other states have followed suit. Transport is the largest contributor of greenhouse gas.
• Consumer spending in the US is modest at 2 per cent in February. Economic growth eases risks of credit crunch.
• Inflation in Europe is also falling. Energy and food costs remain volatile.
• President Macron visits China 5-8th April escaping Paris protests about pension rises.
• EU suppliers of seeds withdraw from UK supply because of post Brexit difficulties with certifications and it is costing them too much to maintain supply.
• Lithium prices have been fixed in China.
• Looming potato crisis as UK farmers reduce land used to produce the crop by 10 per cent beacuse of higher energy costs according to Farmers Weekly.
• Ex-President Trump is the first US President to be indicted for criminal prosecution.
• Late news coming in that all global supply chain problems have been solved and World Leaders reach agreement there will be no more wars.

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April Episodes for Chain Reaction Advanced Information.

• Super Forecasting and Artificial Intelligence (AI)
• The Role of Management Consultants and Business Schools
• Ethical Supply Chains

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All things impacting global supply chains this week.

• Importance of labelling for cross border checks and quality control
• Brexit problems continue to disrupt supply chains in the UK adding additional costs and friction with added risks and reputational damage to many businesses
• Average inventories have increased for many businesses since the pandemic with higher risk and cost trying to make supply chains resilient
• Interest rate rises in the US and the UK to combat inflation
• CPI in the UK rose to 10.4 per cent
• Tik Tok CEO is interrogated about data privacy by the House Energy and Commerce Committee on Capitol Hill. Government employees in the US and UK have been instructed not to use Tik Tok on work devices.
• SVB hit problems last week and reassurances were given by the banking industry that this was not a systemic crisis. This week Credit Suisse Bank is rescued by UBS.
• Accenture sheds 2.5 per cent of its global workforce
• Friendshoring impacts global GDP according to the WTO. It is a key policy instrument for US Government to make supply chains resilient.
• A year ago the IMF said social unrest could damage global supply chains and impact GDP of nation states. This week we were reminded again with the protests in France against the introduction of pension reforms. We also have lots of strikes around the globe as inflation puts pressure on the cost of living for many.
• FedEx is making changes to its operations with cost cutting measures to improve profitability.

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Tony Hines takes a look at key challenges facing global supply chains.
Five strategic challenges are the focus for the discussions in this episode:-

1. The move from analogue to digital supply chains – combining the digital and physical to serve customers efficiently and effectively.
2.  Culture of supply chain organizations.
3. Hines' 7V's – Value Creation Model
   Value in the supply chain is determined by Volume+Volatility+Velocity+Variability+Virtuality+Visibility+Variety
4. Geopolitical risk and uncertainty impacting global supply chains
5. Sustainability and Climate Change

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All things impacting global supply chains this week with Tony Hines.

• Shell CEO plans to keep oil for at least the next decade.
• Tomato imports into the UK suffer from supply chain friction. This has caused shortages on supermarket shelves.
• Delays to HS2 as costs rise. Many think this is a pull back from the levelling up agenda which is likely to impact of future economic advantages HS2 promised to deliver.
• Once upon a time…
• While people struggle with the cost of living the CEO's of two leading global oil companies Shell and BP earn salaries around $12 million.
• New regulations at US Ports could lead to capacity problems.
• Renault and Nissan Strategic Alliance about to be renewed.
• SAP SE to shed 3000 jobs.
• The new EV Road Map foreshadows a new Toyota Way.
• US Economy grew 2.9 per cent in Q4. 
• US added 11,000 jobs in February.
• China renews an unprecedented 3rd term in ofiice for President Xi Jinping.
• The future of supply chains will create opportunities.
• The Dutch Government announced restrictions on the export of Chip Technology to China and this will impact ASML.
• Plastic entering the world's oceans has risen exponentially since 2000 according to a new research study.
• Mitsubishi Motors said it plans to sell only EV's by 2030
• Stelantiss, Mercedes and ACC is developing 3 giga factories.
• Silicon Valley Bank (SVB) sends a chill wind through US Banking sector. It is the first failure since 2008.

Pick up any episodes you missed.

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Tony Hines talks about partnerships and power within supply chains and how it impacts arrangements.

Partnerships in supply chains are essential to create effective and efficient systems. Nevertheless. How many supply chain partnerships work like we would expect? Many supply chain arrangements are partnerships in name only. The reality is that power of a dominant actor in any supply chain will redistribute resources earning a greater share of profit and will control cash flows. The impact of a dominant player is critical to other in parties.

Some dominant players act ethically and are a force for good while others do not.

Cargill is a privately held conglomerate that has over 157 years of experience. The company is a dominant player in food supply chains and transportation. It is highly profitable and a responsible actor. Cargill is both a catalyst and connector. Listen to find out more.

Research on power in supply chains has increased in the last decade often as a consequence of news stories reporting negative impacts. Much of the research is what I call neat and tidy meaning that it builds arguments robustly adopting appropriate methods and theoretical frameworks to fit an academic agenda. However. Much of the neat and tidy research fails to uncover managerial or practical concerns of those managing complex, multi-product and globally dispersed supply chains. I have picked a few that buck the 'neat and tidy' trend. Personally, I would like to see much more focus on practical concerns that make a real contribution to improving our understanding of complex supply chain arrangements.

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Tony Hines with all things impacting global supply chains this week.

•  UK Government agrees a revised Northern Ireland Protocol avoiding borders on the island of Ireland and in the Irish Sea. This should reduce supply chain frictions that hampered the post Brexit trading arrangement. 
• Brent crude closed the week at $85.47 per barrel which is about 1 per cent up on the week. UAE denied rumours that it is about to leave OPEC to pump more oil. China’s returning demand for oil is also pushing up prices.
• The U.S. Federal Reserve said it is “acutely aware” of the challenges high inflation poses to the economy and is “strongly committed” to its 2% target for price increases, the central bank said on Friday in its latest semi-annual report to Congress on monetary policy and the economy. 
• Russia's ruptured undersea Nord Stream gas pipelines are set to be sealed up and mothballed as there are no immediate plans to repair or reactivate them, sources familiar with the plans have told Reuters. 
• Patrick and John Collison are seeking fresh funds for Stripe the company they co-founded 13 years ago while exploring options to take it public, according to people familiar to the matter.  Venture capitalist Paul Graham once called Stripe “the next Google”.
• Apple iPhones soon to be assembled at another site in the southern Indian state of Karnataka and 300 acres have been aside to set up a factory, the state government said on Friday. Bloomberg News had earlier reported that Apple partner Foxconn Technology Group planned to invest about $700 million in the Karnataka site to ramp up local production. 
• Volkswagen's off-road brand Scout Motors said on Friday it would build a $2 billion manufacturing plant near Columbia, South Carolina, for trucks and SUVs. The investment could potentially create 4,000 or more permanent jobs and more than 200,000 Scout vehicles could be produced annually at the facility. VW last sold a pickup in the United States in the early 1980s.
• IMI is diversifying it's supply chain away from China as a consequence of geopolitical tensions.
• Irish packaging firm Zeus is opening a new facility in Cork.
• Shipping is responsible for large quantities of greenhouse gas. A new report “All Brands on Deck” takes a look at major retail brands and their contribution through shipping. Wal-Mart tops the list.
• China's economy due to grow at a higher rate in 2023 exceeding the 3 per cent rate achieved in 2022.
• ARM Holdings have decided to list only in New York in 2023 which is a blow for the London Stock Exchange. Raising concerns that the LSE may not be doing enough to attract tech companies. Capital market reforms  by the UK Government may have influenced ARM's decision.
• Mexico becoming quite a manufacturing hub for the US – Tessla announced plans for the firms largest E.V. factory investment this week.
• Amazon is pausing the second phase of HQ2 in Virginia.
• The US has moved to top of the list of energy exporting nations.
• Catch any episodes you have not yet listened to.

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