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SUPPLY CHAIN TRANSFORMATION

Pandemic-related disruptions caused a supply chain crisis felt the world over. And building a better, stronger system will take more than simply waiting for the bottlenecks to lessen.

Shifting consumer patterns and manufacturing and shipping slowdowns collided on a large scale during the pandemic, sparking a global disruption to supply chains and shipments. While the slowdown may be easing somewhat, the crisis revealed the underlying fragility of the current system. Three Chicago business leaders shared with Crain’s Content Studio how companies are navigating the here and now—and how to build a stronger, more future-ready supply chain.

The supply chain is affecting almost every industry. How has your approach to supply chain management changed, compared with two years ago?

Jeanette Shutay: Models that we relied on historically are no longer valid, so we’ve had to adjust our approach and become more accepting of higher demand forecast error rates. We have always been strategic in our approach, but now we are actively focusing on building out a more robust supply chain network that embraces an ecosystem business model. Overall, I think the industry has started to embrace the need to digitize as much as possible. We focus heavily on creating simulation capabilities based on real-time or near real-time information, so that we can adjust on demand.

Andy Holub: We’re following the same overall approaches we always have–only now we’re initiating them a lot earlier, to allow for anticipated delays. Prior to the supply chain crisis, many of our questions about specifications and design intent were asked during the design development phase of a project. Now, we’re asking more of these questions at the schematic design level of a project. That allows our team to have a full picture of

information about how the delivery status of materials will impact their construction timeline.

John Abrams: For us, the idea of supply chain visibility has moved from theory to you’d better make that happen–and very soon. Supply chain visibility has been a theme in optimized supply chain management for decades, but the past two years have clearly established the need for more intelligent supply chain visibility.

The ability to clearly track the path goods follow across the entire supply chain enables operations at each point to identify and alleviate problems. If I’m a distributor, for instance, how am I supposed to know that we’re going to have supplier challenges? How do I actually get a signal that I can act upon?

What advice would you have for companies that are dealing with the ongoing uncertainty of market pricing and lead times?

CEO Venzee Technologies john@venzee.com 888-359-8110

Abrams: Something that has been taught in supply chain management for several decades is the idea of just-in-time inventory: a principle where you only have as much material on hand as you

ANDY HOLUB

Vice President, Pre-Construction Clune Construction aholub@clunegc.com 312-617-2552

need for the build in front of you.

This entails a very lean inventory and real-time supply that assumes a steady, stable state in the world.

So if you have a border challenge, or a pandemic that challenges all

JEANETTE SHUTAY

VP of Data Science Redwood Logistics jshutay@redwoodlogistics.com 844-467-3396

different parts of the supply chain, you lack the certainty that allows you to rely on lean inventory— which evaporates very quickly—and without a secondary or tertiary supplier, you don’t have a way to

Holub: My first piece of advice is to remain flexible and open to new ideas. Work with your designers and construction teams from a planning aspect to prepare your project with more than one executable option. You should be willing to run with your second

“SUPPLY CHAIN VISIBILITY HAS BEEN A THEME IN OPTIMIZED SUPPLY CHAIN MANAGEMENT FOR DECADES, BUT THE PAST TWO YEARS HAVE CLEARLY ESTABLISHED THE NEED FOR MORE INTELLIGENT SUPPLY CHAIN VISIBILITY.” — JOHN ABRAMS, VENZEE TECHNOLOGIES

what materials will be needed for a project in advance, so they can plan further ahead. Additionally, as we receive updated information on product delivery, we input that data in a material-tracking system on our company’s intranet. That allows anyone at Clune–in every location–to quickly access real-time

JOHN ABRAMS

or third option if necessary. This approach won’t leave you feeling like you’re scrambling to make last minute changes. And from a financial aspect, my advice would be to hold some contingencies.

Things are still constantly changing right now, and we need to be able to adapt to the changes.

The A.I. Platform for the Transfer of Product Data Between Brands and Retailers venzee.com

SUPPLY CHAIN TRANSFORMATION

Pandemic-related disruptions caused a supply chain crisis felt the world over. And building a better, stronger system will take more than simply waiting for the bottlenecks to lessen. restock. So my advice is, rather than give up on just-in-time inventory, make sure you have resilient fulfillment for your suppliers so you can keep your lean practices in place but prioritize redundancy, visibility and resiliency.

Some argue that supply chain bottlenecks will eventually ease. But given the uptick in COVID- and climate-related disruptions, how concerned should companies be with building long-term resilience into their supply chains?

Abrams: Very concerned. In response to the pandemic, many companies actually cut back on any resiliency or redundancy in their supply chain. Companies viewed secondary suppliers as a costly endeavor, so they got cut out. But you can have a very lean supply chain and still accommodate for resiliency. In fact, you have to accommodate for it—and it all comes back to supply chain visibility. That’s why I think COVID- and climate-related

disruptions can be alleviated by technologies that can create an easier flow of information across the supply chain.

Shutay: All supply chains will experience diminished resiliency in the face of worldwide disruptions.

When global viruses or natural disasters occur, they wreak havoc on our food systems and supply chains. Therefore, more focus will need to be placed on diversified chains and a broader systems approach, in combination with strategies for reducing or mitigating carbon emissions. The focus will need to shift to identifying and procuring demand signals that can inform predictive models by sensing and responding as proactively as possible. But there will certainly be cases where predictive models cannot be trusted due to a lack of sufficient data or rapidly changing conditions.

Holub: I believe the COVIDand climate-related disruptions only highlighted a bigger issue simmering below the surface, which is the fact that our supply chain has

been fragile for a long time. The construction industry has condensed our schedules and become a “just in time” world. This leaves us with minimal room for error. If there’s one hiccup in the supply chain, your project schedule can be knocked off track and you have to scramble for a solution to recover.

What do you see as the main priorities, when it comes to building supply chain resilience?

Holub: In the short term, I see suppliers and manufacturers refocusing on their strengths and

and offerings. In the long term, manageable, consistent growth is crucial. It is also very important to increase market diversity so you have a wider variety of manufacturers to source from.

And most importantly, provide customers with honest feedback on schedule expectations, with supply chain issues in mind. Don’t overpromise and under-deliver.

Abrams: I believe the No. 1 priority should be moving toward automation and greater trust in machine-driven decision-making to augment human intelligence.

Humans are poorly suited to

with just-in-time data. Some of the latest technology solutions can scale in real-time, helping to make better decisions and increase transparency. At this stage, automation is a requirement for success and can be facilitated using digital and analytical tools.

We’re already seeing technology shape the future of our industry, allowing for a more nimble and well-orchestrated system.

Abrams: The future of the supply chain is digital. There isn’t any debate on that. There is slowness because it’s costly and you have to change processes,

“THE MORE INFORMATION GROUPS CAN SHARE IN AN AUTOMATED FASHION, THE MORE IT OPENS THE DOOR FOR MEANINGFUL INTERACTIONS ACROSS THE BOARD.” — JEANETTE SHUTAY, REDWOOD LOGISTICS diversifying where they can. This will be done by slowing down production a bit, and possibly limiting product development

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ABOUT CLUNE Clune Construction is an employee-owned, national general contractor, providing construction management services for some of the most respected companies in the world. With six offices across the U.S., Clune manages over $1.3 billion in commercial and data center projects annually and is repeatedly recognized as one of the Best Places to Work in Chicago

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adapt supply chain fluctuations on their own, and often they make counterproductive decisions that lead to even more fluctuations.

We saw that in the context of the conditions introduced by the pandemic: People wanted to return fluctuations to a steady state, but the decisions that were made resulted in the hoarding of shipping containers, which only exacerbated the problem.

Shutay: Personally, I don’t think companies can sustain themselves without analytics and digital tools.

With that being said, analytical models are of no use to the business if the infrastructure to act is not in place. Leveraging external data sources has become, and will continue to be, increasingly important. On that note, data quality is just as important as quantity, so we will need to leverage as much data as possible to build models that can learn and evolve quickly to build a stronger supply chain. Analytics should be used to explain, predict, simulate, and optimize all components of the supply chain. The key is to identify those variables that moderate relationships so that simulations can be run based on strategic assumptions, resulting in more successful scenario planning.

How might these types of tech solutions shape the future of the supply chain?

Shutay: Supply chains need to react faster and be informed

in some cases very dramatically.

There are plenty of corollaries, such as the financial industry.

When financial institutions shifted to a complete digital framework, it opened up the possibility for transactions that can be executed in real time without manual or paperwork delays. In supply chain management, that same thing will happen. But how quickly it happens will be hard to predict.

Companies have a lot of data now, but people still may not trust it and allow their gut to override what the analytics tell them. Humans exhibit more conservative, fearful tendencies when approaching dynamic situations. Companies are going to have to get more comfortable trusting analytical information.

Machines are good at providing reliable analysis, but they’re only as good as people’s ability to heed that machine-driven advice.

When it comes to supply chains, how do you think business leaders can strengthen relationships between their companies and manufacturers and consumers?

Shutay: As a tech-forward third-party logistics provider, my thoughts go to continued investment in system connectivity and visibility platforms. The more information groups can share in an automated fashion, the more it opens the door for meaningful

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interactions across the board.

For example, the more advanced notice you can give a logistics provider, the more opportunity to optimize for lower freight rates, consolidate to fewer shipments, mode shift to reduce carbon impact, etc. On the consumer side, even with the increased pressure for faster delivery, we’ve seen a willingness to delay a multi-package delivery if it means everything can arrive at once.

Shipment visibility is top of mind for our customers, and with all the disruption we’ve seen, everybody needs as much real-time tracking as they can get so they can pivot and adjust. I think people tend to be forgiving if they have transparency, and transparency requires more digitization.

Holub: I’ll add that nothing strengthens a relationship more than getting to know the people you work with. Take time to meet with your partners on a regular basis. Be open and honest with your feedback, ask questions, and listen to what they have encountered. At Clune, we regularly engage with our clients so we can thoroughly understand their vision for their project. This allows us to evaluate material and equipment quantities required to fulfill these buildouts. Once we are able to establish quantities, our teams can provide current lead times and associated pricing. We can then compare this information with the master schedule and advise our clients on when to place an order, enabling them to stay on schedule. With regular communication, both sides come out stronger, with far more effective information for the end users.

This minimizes the risk of delivery delays that come with ordering large quantities of materials from foreign manufacturers.

Abrams: So much of Chicago’s warehouse and rail capacity was built up because the city is a logistics hub–a nexus largely characterized by the physical side of the supply chain. A very strong argument can be made that Chicago is the exact right place to transition from the physical side of the supply chain that we’ve been dominating for a couple hundred years into a dominant position in the movement of the digital side of product and product information.

It’s not a stretch.

Finally, the question everyone is eager to know the answer to: When do you see the current supply chain crisis easing or ending?

Holub: I think it’s going to be a while before there’s a true end.

As I mentioned, our personal expectations of supply and demand are out of balance right now, and have been for quite some time. Many consumers still have the “I want it now” mindset.

However, there are fewer people available to put forth the labor needed to meet the demands of this mindset. The reality is production just isn’t where it was two years ago. I do see this easing over time. But I don’t see this ending until this balance is reconciled.

Shutay: I think a good deal of our challenges can be eased by creating strategic ecosystems of integrated partners and flexible

“I BELIEVE THE COVID- AND CLIMATERELATED DISRUPTIONS ONLY HIGHLIGHTED A BIGGER ISSUE SIMMERING BELOW THE SURFACE, WHICH IS THE FACT THAT OUR SUPPLY CHAIN HAS BEEN FRAGILE FOR A LONG TIME.” — ANDY HOLUB, CLUNE CONSTRUCTION

Chicago serves as a primary hub for the movement of goods in the U.S. What role do you think the city might play in building the supply chain of the future?

Holub: Chicago is the thirdlargest city in the country, centrally located in the U.S., with air, water and ground transit at our disposal.

I believe everyone in the Chicago market needs to build up the supply chain of the future by specifying and ordering locally or regionally made products, whenever possible.

networks. Leveraging these tech solutions can help digitize and optimize the supply chain.

However, I believe there’s a long road ahead for all of us. There’s not a specific date when things will “go back to normal.” With a global supply chain as massive and fragmented as ours, I think we’ll continue to see disruptions, but we’ll also see our industry evolve through innovation.

Abrams: Problems from the pandemic will persist for at least another year, in addition to global conflicts and border

ABOUT THE PANELISTS JOHN ABRAMS is CEO of Venzee Technologies, which aims to optimize and transform the global supply chain with artificial intelligence. Abrams is a supply chain veteran, with more than two decades of experience building high-volume, consumerrelevant networks in regulated and globally distributed industries. Prior to Venzee, Abrams ran one of the largest regulated medical products supply chain, at Cardinal Health. He’s also flexed his supply chain leadership at McDonald’s Corporation, Launch Capacity LLC, and Shotfarm LLC (sold to Syndigo LLC).

Abrams hosts the Rethinking Supply Chain podcast.

ANDY HOLUB is Vice President, Pre-Construction at Clune Construction. He works with teams across the company to “build the job on paper” during the pre-construction phase. Prior to joining Clune in 2018, Holub worked as a project architect for 10 years, before transitioning into project management and pre-construction at a large commercial contractor. He’s now actively involved in facilitating Clune’s project management training, and also oversees the company’s Service Department and Self-Perform division.

JEANETTE SHUTAY, PHD, is VP of Data Science at Redwood Logistics, a logistics platform that has provided solutions for moving and managing freight for more than 20 years. Shutay has extensive experience within the supply chain sector, as well as data science and analytics.

She joined Redwood Logistics in 2021, and she is currently pursuing an advanced degree in biology from Miami University in Ohio, with a focus on environmental conservation.

challenges that impede consistent, reliable transit of goods needed to reach consistent inventory supply. It’s tough to predict, but we’re likely going to deal

with the impacts of this supply chain crisis for another 12-plus months. Even if Chicago is done with the pandemic, it doesn’t matter for supply chains, because

materials are coming from all over the world. In many places, the pandemic is still wreaking havoc, and we are looking at challenges that won’t stabilize for some time.