Almost any item we buy or sell today was made with contributions from many companies and individuals in many places. The Center for Supply Chain Research in Penn State’s Smeal College of Business is dedicated to understanding the logistics of supply, transport, and distribution at local and global scales. Steve Tracey, executive director of the center, talked with us about the challenges of doing business in our highly interconnected world.
What’s a “supply chain?”
It’s a whole ecosystem of organizations that starts with a company’s suppliers’ suppliers and ends with the customers’ customers. Think about how a pencil is made—the yellow pencils that we’ve all used since we were little kids. What’s in a pencil? There’s wood, there’s paint, there’s the lead inside, the metal that holds the eraser on, and the eraser itself. All of which originate in different places, from different firms. On the other end, a company that makes the pencils might sell them to office supply companies, but they’re not the ultimate purchasers. Consumers are, or businesses or school districts.
Does the concept of a supply chain apply to small businesses?
It exists no matter what size the firm is. Even if you’re a one-person operation, you still have the same challenges. Let’s say you own a little shop that sells ornaments for the holidays. None of that comes from here. It’s being manufactured overseas somewhere. A lot of these firms use services to run their supply chain, handle all the paperwork that’s necessary with U.S. Customs, pay the duties and the brokers’ fees and all that. And that store owner may have no interest in how they do it. All the owner is interested in is, ‘I give them the order, and the product shows up at my door.’
Dealing with international trade sounds especially complicated.
It’s as complex as you can possibly imagine. Everything is an export or an import somewhere. I was in the textile business. We had manufacturing facilities in 14 countries, and we sold in 92 countries, and we sourced in others. So probably 20 countries of origin and 92 countries of delivery. And that’s just the movement of goods; that’s not making anything.
What kinds of research does the Center do?
Our highest level marries industry and academia to do research that’s applicable to the business but also fundamental to the supply-chain area. In 2015 one of our faculty members won an award for research he did with Dow AgroSciences. He created a solution for a complex problem they had, published it in an academic journal, and won an award for it. We also do ‘practitioner research,’ like a project on maintenance and repair in highly automated businesses—how do they keep track of all their spare parts? And our students do about 40 projects a year that companies come to us with. It’s really good for the students—they learn how to do research in a supervised way, and they get a lot of contact with the companies.
Are businesses looking for people with training specifically in supply chain?
Yes! Most of the people who are in these roles today don’t have professional training in it. They tend to be later-stage professionals with broad expertise. I would be a classic example of that. I was a finance guy by training. I ended up in supply chain sort of by accident, five or six years into my career. It was called “operations” back then. Companies now recognize that their supply chain is this big ecosystem that has to be managed in a thoughtful, organized way, but there’s a big talent gap in the profession. That’s wonderful for our students—they get plenty of job offers!
What qualities are needed to deal with supply chains?
You have to be good with numbers, you have to be able to think on your feet, and you have to be able to find creative solutions to problems. Students often ask, ‘How do I do this?’ and I always say, ‘There’s a hundred ways to do it—and the hundred-and-first way might be the best way.’ You have to be a little bit of a scientist, because people are constantly experimenting with new ways to do things.
The Center for Supply Chain Research™ is supported by contributions from corporate sponsors. With its emphasis on research, its educational programs for business executives, and more than 1,000 undergraduates majoring in supply chain and information systems, Penn State is a world leader in supply chain research and education.