Meet Pam Donovan, a clinical assistant professor at the University of Tennessee, Knoxville’s Global Supply Chain Institute who earned her Ph.D. in logistics and transportation from the University of Maryland. Before joining UT’s faculty in 2018, Donovan was a career transportation and logistics officer in the United States Air Force. Donovan also served on the faculty of the Air Force Institute of Technology and the University of North Texas.
After an incredibly challenging year for supply chains, the world is beginning to appreciate supply chain management as a critical business discipline. Moving forward, what do you foresee changing with this elevated awareness?
Many organizations who had been looking to change their network and implement a new strategy, say three to five years down the road, instead used COVID as a catalyst to implement those updates now.
A great example is Walmart: Walmart took portions of their regular stores and turned them into mini warehouses. Walmart already had a strong presence in the online grocery segment, where you could place your order for curbside pickup. During COVID, they expanded this service to include everything else in the store. These mini warehouses also serve as stocking points for home delivery. Instead of shipping an online order from a distribution center somewhere in the middle of the country, hundreds of miles away, Walmart can now ship the order right from the store closest to you.
Another good example is Kroger, who already had an online grocery service with curbside pick up. Now Kroger is expanding their services with online delivery by opening twenty new, fully automated warehouses. This new strategy fills an order using robotics to pick individual items at the warehouse and deliver it to the customer within some delivery window. If there’s one thing we’ve learned from the pandemic, it’s that everybody wants their groceries delivered. If customers can get good quality groceries delivered and it’s no more expensive than actually going to the store, people are going to jump on that. And without the pandemic, I’m not sure this opportunity or need would have been as apparent, at least not this fast. In fact, Kroger had planned for online grocery delivery pre-COVID, but accelerated their plans in 2020 after seeing record digital sales. They expect a permanent shift in grocery buying trends post-COVID.
We’ve had major supply chain catastrophes occur over the past year, like a global pandemic and a container ship stuck in the Suez Canal. How is GSCI teaching students to think about volatility differently and mitigate risk from these types of low probability, high risk events?
Personally, I don’t think of the pandemic or the Suez Canal blockage as ‘low probability’ events. And what I mean by that is, sure the events themselves may be unlikely, but is an unforeseen disruption in a distribution network that impacts the supply chain low probability? No. There will always be disruptions and delays, whether it is a major weather event, a supply shortage due to political or economic instability, or a labor constraint.
Something GSCI has been teaching in our supply chain programs for years is that these events do happen, so you have to plan for them. Contingency planning is always important and companies need to be more flexible. You have to learn how to pick up and recover from a disruption, do this quickly, and revise plans to minimize the impact the next time a disruption occurs.
Can you share an example of an industry that you observed that was especially impacted by the pandemic, who ultimately responded with unforeseen innovation?
The air transportation industry is a great example. Not only was there a significant disruption, but the recovery is still ongoing and unresolved. It started with a significant drop in demand due to travel bans in 2020, grounding a majority of the passenger aircraft. And so, those carriers had to make a very expensive decision on what to do with the aircraft that weren’t being flown. In many instances, aircrafts were just sitting there, doing nothing, not moving passengers, and not earning money.
But from that crippling disruption came innovation?
Yes. In the United States, half of all air cargo moves on the belly of passenger aircraft; the other half moves on either all cargo aircraft or with small package carriers , like FedEx and UPS. So, 50% of all air cargo capacity is in the belly of passenger aircraft, and when those aircraft aren’t moving passengers, they’re not moving cargo. Many airlines got creative and started moving cargo on the main deck, taking advantage of the unoccupied seats and isleways. Some carriers even took out the seats to move larger shipments or small skids of cargo. As long as the shipment could fit through the passenger doors, it could be moved on the main deck of the aircraft. While it was relatively inefficient, because they had to hand load all this cargo which is very labor intensive, it kept the airplane flying. Even with these initiatives, many passenger aircraft were put into storage. By the end of 2020, only about 45% of air cargo capacity on passenger aircraft was back in service.
Can you describe a key insight that you’d want every single SCM student at UT to bring with them back to their company?
Disruptions will always happen. If you understand how the levers within your organization’s supply chain impact your operations, you can design a backup plan and implement redundancy in your system, and where it needs to be, so the impact to your organization during times of crisis is minimized.
How does GSCI’s approach to SCM leave students better prepared to face the challenges of the next decade than a conventional program?
At GSCI, we have a great group of faculty and corporate partners that keep us thinking about new ways to look at supply chain management and new ways to innovate our practices. We’re always pushing the envelope in terms of innovation. At the same time, we want to be accessible to everybody, not just academics, so we take lessons learned from our corporate partners and turn them back into real problems that students can work through. That approach provides an always-evolving perspective to keep insights fresh and moving forward.
The Haslam College of Business at the University of Tennessee, Knoxville, provides students and partners access to industry-leading supply chain experts like Professor Pam Donovan. Helping global institutions train future supply chain leaders by integrating new insights from the worlds’ evolving supply chains is one of the ways the GSCI can support you and your dynamic organization. Learn more about the Master in Supply Chain Management – Online and the Executive MBA for Global Supply Chain at the Haslam College of Business.