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IBM exec: Every day in the supply chain has a black swan

Other themes on Day One at Gartner: Sustainability is important to CEOs and supply chains can be part of that

Left: Ken Chadwick, Gartner; right, Joe Berti and Rob Cushman, IBM Photo: FreighWaves

LAKE BUENA VISTA, Fla. — After a discussion about the theory of black swans in markets — in which a development occurs in spite of enormous mathematical odds, like a black swan being hatched — Joseph Berti told an audience at the Gartner Supply Chain Symposium that their industry has a black swan daily.

“If there is anything you can remember, it’s that two days are never the same in the supply chain,” said Berti, a vice president at IBM (NYSE: IBM)  “Just because it happened in the past doesn’t mean it is going to happen in the future.”

Berti was one of several presenters on Day One of the symposium that brings together a wide swath of individuals who deal in the supply chain every day. Tables at typical meals during the event may include supply chain managers who are either the suppliers or the recipients of everything from aircraft parts, high-end women’s handbags and other accessories to pharmaceuticals, a wide range of industrial supplies and electronic components. 

Because of the pandemic, Berti said, “things may never be the same again forever from here on out.”

“The original belief of black swans is that they didn’t exist,” Berti said. “In supply chains you run into those types of problems all the time. Things you couldn’t imagine ever happening happen.”

The pandemic was one of them. 

But Berti was primarily interested in looking forward.

He said continued growth in world population will be a significant issue for supply chain issues, “because as the population increases, we are going to have more and more people who need cars, TVs and food.” And that, he said, increases the probability of geopolitical issues as growing numbers of people seek out those commodities as well as jobs.

Climate-related issues also will impact supply chain issues, Berti said, citing the extreme case of the Texas deep cold snap of February 2021, which froze components to make paint — something that the supply chain likely never envisioned.

But he was optimistic that supply chains are up to the task. He said companies are getting better at building a “data lake,” a growing accumulation of data that can be used to make future decisions. If a company doesn’t have one, Berti said, “you should start working on that immediately.” It gives companies a “global view” of data to combat what he said is too much siloed information. 

Berti was joined on stage by Rob Cushman, a worldwide leader in IBM’s supply chain business. 

Cushman said that when he “walks the halls of the companies where the people in this room come from, there is a pretty consistent set of problem statements.” One of them, he said, is around a “control tower,” which IBM defines on a web page as “a connected, personalized dashboard of data, key business metrics and events across the supply chain. A supply chain control tower enables organizations to more fully understand, prioritize and resolve critical issues in real time.”

One of the things needed to make a control tower work successfully, Cushman said, is artificial intelligence. Echoing the theme that no two days are alike in the supply chain, Cushman said AI is the tool needed to predict demand. 

AI “creates visibility that allows us to predict events that may not even be things that are visible to the customers. But we can look ahead. All this stuff exists today. It’s just a matter of focus.”

One of the lasting legacies of the pandemic is likely to be found in the priorities of corporate CEOs, not just in the supply chain but across industries. That’s according to Ken Chadwick, a vice president and analyst at Gartner who in a presentation just before Berti’s reviewed the findings of Gartner’s most recent survey of CEO priorities.

Moving high on the list: sustainability. “We are going through this big shift, and we are needing to deal with this on a regular basis,” Chadwick said. 

But it isn’t just sustainability, he added. “We know in talking to CEOs that they can see that their social license to operate means that they need to be taking into account sustainability, business ethics, diversity and inclusion,” he said. 

In the most recent Gartner survey of CEOs, in which respondents are asked to list three top issues, supply chain issues were on 7% of the submissions, but that was up 75% from the survey conducted before the pandemic. “We need to see how we can invest as supply chain leaders to help the CEOs,” Chadwick said.

He boiled down the various issues listed by the CEOs into two areas: green and growth as one category and people and productivity as a second. Particular issues in that second category surround remote work and the balance between the old office-based system and the new reality. 

“All these changes are critical for the supply chain, because it is the supply chain that helps the CEOs,” Chadwick said. “They could not just imagine the possibilities but also deliver them because of the supply chain, and that is our role in the sustainability initiative.”

Chadwick cited a quote from Ford CEO Jim Farley who said that in a “transition” to a more digital economy, “the supply chain could be one of the biggest advantages a particular company has.”

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John Kingston

John has an almost 40-year career covering commodities, most of the time at S&P Global Platts. He created the Dated Brent benchmark, now the world’s most important crude oil marker. He was Director of Oil, Director of News, the editor in chief of Platts Oilgram News and the “talking head” for Platts on numerous media outlets, including CNBC, Fox Business and Canada’s BNN. He covered metals before joining Platts and then spent a year running Platts’ metals business as well. He was awarded the International Association of Energy Economics Award for Excellence in Written Journalism in 2015. In 2010, he won two Corporate Achievement Awards from McGraw-Hill, an extremely rare accomplishment, one for steering coverage of the BP Deepwater Horizon disaster and the other for the launch of a public affairs television show, Platts Energy Week.