Keeping the Supply Chain Well Oiled
“Not a modern digital watch, but the old-fashioned watch with the little gears,” said the operational management instructor in the Beacom School of Business. “Everything has to come together and be timed perfectly for that watch to work well.”
Similarly, a company’s procurement of materials, manufacturing of products and delivery of goods are processes that can move with the precision of a well-wound mechanical watch or wobble maddeningly out of sync.
A worldwide pandemic can certainly gum up the workings of moving products to market. When it’s followed by record-setting inflation, international conflict and high oil prices, even the most efficient and resilient system can experience bottlenecks.
This fall, the Beacom School of Business introduced a new bachelor’s degree in supply chain management to prepare the next generation of business professionals with the expertise to anticipate and manage these complex systems.
This new academic offering arrived when supply chain snarls have emerged as a kitchen table topic.
“When things are working the way they're supposed to, you don’t notice the supply chain at all,” Martin said. “As soon as something happens, it’s at the forefront of everybody's mind.”
Where Is My Dishwasher?
Since early 2020, consumers have become more aware of the logistics of creating and delivering products and services when certain items became scarce. Whether your family’s new dishwasher sat at a crowded port or remained at the manufacturing facility awaiting a crucial backlogged part, you only knew that you were hand-washing dishes longer than anticipated.
Martin has taught the Supply Chain Management course at Beacom School of Business since 2014 and monitors the myriad factors affecting supply chains. Martin’s expertise in supply chain management grew from experiences during the last half of his 22-year service as an active-duty officer in the U.S. Army and in the private sector after retiring from the Army as a lieutenant colonel in 2013. “I didn’t really go into it intentionally, it kind of found me. But I enjoyed it and was good at it,” he explained.
When Martin considers the elements of a supply chain—labor, raw materials, transportation—he ranks the price of a barrel of oil as most important.
“From that barrel of oil comes the diesel fuel that runs our ships and our trains,” Martin said. “Consumers consider the price of gas when they are running to the store to pick up items.”
Crude oil also forms the basis for most plastic production. “We rely on plastic and where does that come from? It comes from oil,” he said. “No matter how many windmills we have running or how many solar panels we have, we don’t get plastic from the sun.”
Martin thinks manufacturing and transportation industries have caught up from pandemic-related shutdowns and delays.
“In my opinion, the virus aspect is in the past, even though it was just a couple of months ago that China finally lifted restrictions at their ports,” he said. “The U.S. West Coast ports are getting fairly caught up. We don’t have 120-plus ships waiting to dock. The last time I looked, we were down to fewer than 20.”
Instead of COVID-related delays, labor negotiations between 29 ports on the U.S. Pacific Coast and 22,000 workers are currently at the forefront of industry and government concerns, Martin said. About 40% of all U.S. imports flow through these ports. Automating the movement of cargo is at the center of talks.
“Our ports are some of the worst as far as efficiencies in the world, partly because we aren’t automated,” he said. “We’re still doing things the same way they did it 50 or even 75 years ago, relying on a lot of labor to offload the ships.”
Recent disruption underscored the need for a resilient and sustainable supply chain management system that can adapt to and endure challenges, he said.
“If I source a raw material from someplace or a subcomponent from another, I need to make sure I have a predictable supply,” he said. “But the trend in the past has been using one supplier to keep things simple.” Creating relationships with multiple suppliers mitigates much of the risk.
Martin added that some companies aimed to avoid overseas manufacturing and shipping delays by switching to domestic suppliers but encountered higher labor costs and a lack of options. “Can you make that product in the U.S. and be profitable? It depends. How much do your customers want to pay?” he said.
Planning and Communication is Key to S.D. Company’s Success
One Sioux Falls-based company has weathered the supply chain disruptions of the past few years not only through data-driven decision-making tools, but also through close connections with suppliers.
Communication plays a significant role in managing the materials that Maguire Iron needs to build and maintain water towers in the region and nationwide. Maguire Iron has two divisions—one that builds and fabricates water towers and another that maintains and services them. Each division relies on suppliers for materials such as plate steel on the building side and coatings, paints, brushes and rollers on the maintenance side. In Sioux Falls, and at a new facility in Texas, the company employs 175 people.
Scott Jones is president of Maguire Iron and a 1988 graduate of USD with a degree in chemistry. He said his company’s management team keeps in close communication with their suppliers to ensure they’re ahead of possible kinks in the supply chain. Suppliers tipped his company off about upcoming steel supply shortages in late 2019.
“We ordered a bunch of steel six months to nine months ahead of time,” Jones said. “Our leadership team does a great job of communicating with our partners. Our two big paint suppliers are Sherwin Williams and Tnemec, and we communicate with them on a weekly basis of what coatings they are low on or shortages they anticipate.”
Even with this close communication, supply chain interruptions occur. “There could be one eyedropper of a chemical in a batch of paint that our supplier can’t get,” said Jones. “And that shuts down that entire batch.”
In this case, the company’s logistics and analytics team pivots to find a new vendor to complete a project on time. “We will still have our preferred vendors. But when they’re out of something we have other options.”
Jones added that the company’s water tower projects are under federally supported infrastructure projects and must be completed with American-made products. Maguire Iron maintains a close relationship with preferred vendors, but also a deep bench of suppliers who can fill in with products when needed.
“Especially in the consumables market—rollers, blast hoses, personal protective equipment, harnesses, safety glasses and equipment like that—we’ve had to reach out and establish new relationships with new vendors,” Jones said.
On the technology side of things, Maguire Iron spent the past two years implementing an enterprise resource planning (ERP) system that coincides with the company’s current construction of new headquarters, fabrication and maintenance facilities in Sioux Falls. This data-driven software system offers analytics to help the company manage materials and supplies.
“In terms of our supply chain, it will give us a better view of what we have on hand and how many supplies we are using and are needed, and it will help us make decisions faster and further into the future,” said Jones.
Analytical tools, coupled with clear communication with suppliers, keep Maguire Iron’s supply chain humming.
“Along with logistics, the relationships with your vendors are the most important,” Jones said. “When you’re both looking for solutions, that’s the best fit.”
New Bachelor’s Degree Serves Students and Businesses
At Maguire Iron, Jones said his company looks for logistics professionals who are “self-motivated, highly organized, very detailed.
“And we like people who come from a winning background, such as USD,” added Jones, who, in addition to his executive position at Maguire Iron, holds numerous records from his time as quarterback for the USD Coyotes football team in the 1980s.
The new major in supply chain management at the Beacom School of Business will graduate students with the skills and knowledge to improve supply-chain decisions, deliver value for customers and increase employer profitability.
Beacom’s Martin said the new major will focus heavily on data analysis as well as issues related to transportation, warehousing and distribution management.
When our graduates are on the first day of their job, they will know how supply chains function. They will be able to speak the language and understand all the different pieces and parts to the processes,” Martin said.
The new degree’s curriculum was designed by Martin, the Beacom School of Business Analytics Advisory Council and multiple employers from the region. Graduates from the program will fill a need. According to the Bureau of Labor Statistics, the projected job growth from 2021- 2030 for logisticians, or those who analyze and coordinate an organization’s supply chain, is an impressive 30%.
“The job prospects in supply chain management were always pretty good,” Martin said. “Now, it’s even better. I don't think any of our majors are going to have a problem finding a job once they graduate.”
Martin said professionals who excel in this line of work not only have the skills to problem solve, but they also delight in the challenge.
“When you’re just doing your normal job—when the supply chain works—it gets kind of boring,” he said. “The exciting part of the job is when things go wrong, and you have to fix it.”