Why I Care: Bridging an Endless Supply-Chain-Academia Divide

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Ohno and Imai

I was never a good under-grad student. Generic subjects like “Mickey Mouse” Math, freshman Biology, or Elementary Fortran bored me—completely. Then, I took a Business Statistics class on ‘Managing Variation,’ with Dr. David Wheeler, a student of the famous quality guru, Dr. Edwards Deming. The proverbial light blinked on and I became a Deming disciple for the rest of my career. 

Ten years later, I found myself coming to work for Toyota. Similar to the HBR Case Study Learning to Lead at Toyota (Spear 2006), I was immediately shipped to Nagoya for training. In Toyota City, we dove into Japanese culture and the Toyota Production System (TPS) to strategize becoming a manager in our world of perfection.

Studying in Toyota City

As a student of the original masters who invented TPS, I learned to:

  • Consider the mid to long-term needs and inputs.
  • Live “Genchi Genbutsu”—go-and-see to experience.
  • Seek the most rational approach while striving for cost efficiencies.
  • Promote teamwork and develop our people.

The School of Ohno and Imai

I thrived at Toyota, ready to apply the lessons of Ohno and Imai into our daily work routines. I became a JIT (just-in-time) guy, and along with our team could operate a 22-day close-loop cycle with 4 hours inventory inside the plant that built a thousand Corollas and 600 Tacoma Pickups a day. As my TPS knowledge grew, my job became easier—letting those business members closest to the work control and own their processes.

Dave Cote on Working Capital

Dave Cote Honeywell

Fast forward to 2003 at Honeywell: our new chairman, Dave Cote gave us a ‘Chalk Talk’ about working capital and its impact on a company’s balance sheet and income statement. Cote shared with us that this is one of the main metrics to evaluate business health and performance.

I reached out to an academic colleague, Paul Dittmann, from The University of Tennessee to gain a deeper understanding. Cote’s point was underscored by Paul:

“When the CFO at Whirlpool asked us if we could somehow use our supply chain to cut working capital in a major way, I was clueless. I’m embarrassed to say I couldn’t even define working capital. I was stunned when I discovered the huge impact working capital has on the firm’s overall financial health, cash flow, and ultimately shareholder value. And I was surprised and gratified when three years later we had taken $600 million out of working capital using supply chain projects.” 

I was constantly surprised on my educational path, at two highly rated universities, that no one ever taught us this simple formula of: 

Working Capital = Current Assets – Current Liabilities

Furthermore, topics such as Global Trade and Supply Chain Finance as well as basic business acumen are typically omitted from business curriculums. Few programs teach the ‘soft skills’ like Decision Making, Negotiations, or basic Behavioral Skills that are highly valued in the workplace. These subjects are some of the keys for a graduate to find success in a career. 

The Real-Life Academia Disconnect

disconnect between supply chain and academia

This leads me into the perilous waters of the disconnect between academia and practitioners. For my two papers, I read over 90 case studies from various academic journals and publications. This was a daunting task, (most of these papers are completely unreadable to a layperson). They often just quote each other, and present formulas so complicated that it takes a Ph.D. to decipher.

This was especially true when I was reading about Supply Chain Risk, with writers taking painstaking effort to create formulas to manage the process. I thought of the many supply chain disruptions I’ve encountered. There wasn’t time for detailed calculations. Instead, we reached into our desks, pulled out the pre-approved business continuity plan, and implemented it—that simple (and this complicated).

Now that we are in a global pandemic, I wonder if these supply chain intellectuals have gone back to review their calculations and see how well they performed predicting a real-life event?

Additionally, what and who determine the topics for these journals? Who is paying for all this? Why would there already be 13,200 academic and consultant BlockChain articles, in 2021 as of February? (A staggering amount of research invested on a still unproven concept.)

Does it all just revolve around grant money or are there other motivations? Call me pragmatic, but maybe a more pertinent topic for 2020 and 2021 would have been business continuity and the impact on the balance sheet? 

The COVID Impact on the Knowledge Gap

COVID supply chain disruption

Lately, I am hearing devastating stories from so many educated supply chain professionals struggling to manage problems that we eradicated decades ago in the wake of the global pandemic. My heart goes out to them, and I wonder why no one taught them to beware of these rocky shoals?

Today, everyone wants to enable their processes with the latest technology or app, but what they fail to understand is that no amount of technology will help without understanding the fundamentals of the business.

“You put a computer in a bad operation, and you just get a worse operation—quicker,” Mr. Toyoda told me on that long flight to Augusta. Managing operational processes isn’t as sexy or edgy as topics like BlockChain, but if you don’t manage them correctly, nothing—no technology or new concept—can work anyways.

When I started teaching here in Vietnam, my goal was to first teach my students how to get a job, but second (and more importantly), how to be able to work in today’s business environment. So, not only are we learning from the lectures and textbooks, but we’re also spending an equal amount of time on practical problem solving, simulating real-world events like port closures, poor trade practices, and civil unrest.

Business operations knowledge

In addition, we look at cultural behaviors within a business, including dealing with marketing to prevent the bullwhip effect or how to manage an oncoming flood of corporate initiatives. I firmly believe we must prepare our students for the world they are about to inherit by passing along our knowledge to these next-generation leaders.    

‘Those who do not learn history are doomed to repeat it.’ George Santayana