The Rapid Evolution of Supply Chain

Supply chain operations have evolved quickly over the years, changes still to come

By Kevin Tankersley

A television commercial that aired in the mid-1990s depicted a woman pushing a shopping cart in a grocery store. Her toddler is strapped into the seat of the cart, and they’re headed to the orange juice cooler. A store manager sees that he is low on product and places a frantic phone call, hoping to quickly replenish his stock.

The scene cuts to an orange grove, where workers relay a carton of juice from person to person, reaching the customer’s hand just as she reaches through the cooler into the leaves of a tree.

That commercial, Pedro Reyes said, is the definition of an end-to-end supply chain, getting a product from its place of manufacture to, literally, the customer’s hand.

“When you are designing a supply chain, you need to understand the type of product it is and how you are going to get it from the furthest point upstream, downstream to the customer,” Reyes, an associate professor of Operations and Supply Chain Management in the Hankamer School of Business, said.

Supply chains and how they work and who oversees them have changed drastically since Reyes began teaching at Baylor in 2003, and even more so since he was in the restaurant business in 1980. He was an assistant manager at a Pizza Inn location in Duncanville, Texas, and was then promoted to store manager one month before his 18th birthday.

“And I had not even set foot in college yet,” Reyes said. He would go on to earn four degrees: a bachelor’s in mathematics, two master’s, and a PhD in management science, all from the University of Texas at Arlington.

Supply chain management at Pizza Inn then consisted of Reyes sitting at his desk, looking at each paper order form turned in by the waitpersons who had worked that day, gathering data of what customers had consumed and forecasting what he needed to order from his distributor.

The digital cash register made his job easier, he said, providing “more data, better data, rich data,” and then the barcode came along, which was a game-changer in supply chain management, though it was disruptive, which happens each time new technology is introduced.

“Manufacturers had to retool their processes so that they can put it on there,” Reyes said. “Companies that made packaging had to retool, so they can put that ink on there.”

Even though the barcode was disruptive, the data it provided allowed supply chain managers to better oversee each step of the supply process and that continues as data management improves even further.

“The biggest change that I have seen over my time is our ability to gather, collect, distill, interpret and use data,” Matthew Moton, director of supply chain operations and real estate operations for Surgical Care Affiliates in Birmingham, Alabama, said. “When I started my career, a lot of functions were a little bit more siloed than they are today and as we have matured as a healthcare industry and as supply chains, our ability to find a common thread to carry through all of our data points not only helps us aggregate and source materials more effectively, it also allows us to help through with the major pillars of healthcare, which are cost, quality and access.”

Moton said while the healthcare industry uses several tools to gather supply chain information, electronic health records that became required under the Affordable Care Act has been one of the biggest innovations he’s seen since beginning his career in 2006.

“Prior to the Affordable Care Act and the rise in the electronic medical record, our ability to tie purchasing data to patient health data was limited,” he said.

Moton who graduated from Baylor University with a bachelor’s degree in Entrepreneurship in 2005 and then earned a master’s in Healthcare Administration from the University of Houston-Clear Lake, has had some first-hand experience in disruption of the medical supply chain recently with a sudden rise in need for medical masks.

“Overnight, you basically had an exponential increase in demand for masks that was complemented by roughly 50 percent of the world’s manufacturing base shutting down. First, there were unexpected shutdowns for the Chinese New Year and then plant shutdowns for extended periods where nobody was able to go back to work due to COVID-19,” he said. “So you had manufacturing go away, you started to deplete reserve inventories, and then you had an increase in the demand because governments all over the world were providing guidance that everyone should now be wearing a mask as a preventative measure to control the spread of the virus. It was a perfect storm. This event affected supply and demand which amplified constraints and dependence within the supply chain. Further, retooling and setting up a new plant is an expensive proposition and not an option that can immediately pivot to meet demand. It takes time to initiate this process, invest capital, to find the location, build the plant, hire staff, etc.”

In addition, there was a shortage of spunbond meltblown spunbond, known as SMS, the material that is used to make medical-grade masks. That same SMS is also used in the production of surgical gowns, disinfecting wipes, surgical shoe covers and diapers.

“So now you have idle plants ready to make masks, but they can’t get the material to make the masks,” Moton said. “When you have those trickle-down effects in supply chain, it causes ripples throughout the industry and it is kind of fascinating to watch.”

When a pandemic such as COVID occurs, or when a natural disaster occurs, like when Hurricane Harvey struck Houston in 2017, most organizations’ supply chains “are not prepared from a supply chain perspective to respond to these types of events,” Kendall Carameros, a 2016 Baylor Supply Chain Management graduate and management consultant specializing in the supply chain integrated planning and fulfillment practice at Accenture, the largest consulting firm in the world, said.

“What we try to help clients with is to not just to react to these types of events, but to be proactive and forward-looking,” Carameros said. “We help clients scenario-model and optimize potential disruptions, whether it be a catastrophic event, like a natural disaster, or COVID, or a small event, like a production disruption in a facility.”

When solving supply chain problems or even implementing new technologies or a new system, it’s essential to keep the customer or end-user in mind, Annie Jaska, manager of technology strategy and advisory at Accenture and a 2016 Baylor graduate with degrees in Supply Chain Management and Management Information Systems, said.

“Every time that I’m trying to implement a solution, or I’m advising someone on how we solve a problem, I say, ‘we need to think about this from the business perspective, otherwise, this new system or this new technology is not going to be used,'” Jaska said.

Students who choose a double major, as Jaska did, “are going to be worth gold,” Reyes said.

“Supply chain and information systems. Supply chain and finance. Supply chain and accounting. The jobs of the future are going to go to those students who can capitalize on the linkages between supply chain management and those other specializations,” he said, since the field is changing so quickly.

“The kids that are starting elementary school right now, in first and second grades, when they go to college and then get a job, those jobs are not even defined yet,” Reyes said. “Students who started college here, the jobs have already changed. That’s how quick the job design has changed.”