As companies downstream demand it, supply chains are working to improve sustainability. As the relevance of sustainability grows in the eyes of businesses, consumers, and investors, the education of the next generation of supply chain experts must adapt.
FreightWaves spoke with Matt Waller, dean of the Sam M. Walton College of Business and supply chain management professor at the University of Arkansas, on the future of supply chain education.
Waller is also a FreightWaves adviser and will talk at The Future of Supply Chain in Northwest Arkansas in May.
For clarity and duration, the interview has been modified.
FREIGHTWAVES: Do you believe that sustainability will have an impact on supply chain education in the future?
“Business logistics is about controlling the flow and storage of merchandise in order to minimize total costs while meeting customer service standards,” says WALLER. These overall expenses include inventory holding costs, transportation costs, bad service costs, material handling costs, labor costs, and so on. Minimizing these expenditures while meeting various customer service targets was not previously subject to customer visibility, but that is changing.
“We must now analyze how the way we trade off these costs against one another affects customer perceptions, such as preferences for specific types of sustainability and how customers view them to be good for the environment.”
“Eventually, everything will become visible, and more and more measures will be measured and made public.” All of this must be considered when establishing various customer service targets and trading off these costs.”
FREIGHTWAVES: Could you give an example of one of the trade-offs you mentioned?
“To attain a certain fill rate, a firm can retain more inventory and utilize slower transportation, or it can hold less inventory and use faster transportation,” WALLER explains. Similarly, a company can use slower shipping and get lower fill rates for a similar level of inventory.
“Also, in order to attain a certain fill rate, a company can keep more inventory and use less dependable transportation, or it can keep less inventory and employ more reliable transportation.” These are some simple instances of trade-offs. They will all have various effects on sustainability indicators.”
FREIGHTWAVES: Can you name a few aspects of sustainability that you believe will be important in supply chain education in the future?
WALLER: “As I indicated before, business logistics is about controlling the flow and storage of inventory in order to minimize total costs while meeting customer service targets.” Supply chain management is concerned with the integration of business processes inside a company and across enterprises in a supply chain.
“Such integration entails activities such as information sharing, especially information pertinent to sustainability.” As a result, one of the most important components of sustainability that will be present in the future will be measurements of sustainability and how those metrics are affected by logistics and supply chain management decisions. Furthermore, systems theory will be essential for comprehending sustainability and supply chain management.”
To learn more, Waller suggested reading The Luxury Paradox: How Systems Thinking and Supply Chain Collaboration Can Bring Sustainability into Mainstream Practice from the Journal of Business Logistics.
FREIGHTWAVES: How is the University of Arkansas’ Sam M. Walton College of Business responding to the industry’s growing demand for sustainable supply chains?
“We are cooperating with industry partners on environmental, social, and governance issues, as well as conducting research on areas related to sustainability and ESG in general,” says WALLER. We’ve been working on this with J.B. Hunt Transport Services Inc., as well as The Sustainability Consortium.”
Tyler Cole, head of carbon intelligence at FreightWaves, emphasized the significance of incorporating sustainability into supply chain education.
“There is no doubt that higher education is gearing itself for a surge in interest in sustainability and supply chains,” Cole said. Supply chain schools with a history of success should double down on developing future leaders capable of understanding and evaluating network risk and maximizing stakeholder value. The days of focusing solely on expense reduction and share value maximization are long gone. I hope to see more graduate and doctoral case studies that highlight the value of resilient, sustainable supply chains.”
