When Tom Linton speaks….

If you’re of a certain age, you might remember the E.F. Hutton commercial – “When E.F. Hutton speaks, people listen.” A few weeks ago, I had a chance to chat with Tom Linton, the former supply chain leader for the contract manufacturer Flex. I first heard Tom speak at a conference at MIT in 2013. Since then, I’ve had the opportunity to publish an excerpt from The Living Supply Chain, the book he co-authored with Rob Handfield, and to feature a presentation on the Flex supply chain by one of Linton’s lieutenants at last year’s NextGen Supply Chain Conference. Given his experience, and, frankly, his vision, Linton is one of those individuals you want to listen to.

The catalyst for the call was his appointment to lead the executive advisory board of Resilinc, the risk management platform. But it was also a chance to talk with him about where he sees supply chain management going – COVID or no COVID. It’s a topic he has been writing about Harvard Business Review with Bindiya Vakil, Resilinc’s founder and CEO, including a call for more resilient supply chains and the need for manufacturers to take care of their suppliers during this turbulent time.

Linton began by saying that for better or for worse, supply chain is in the spotlight. “There’s almost a daily feature in the Wall Street Journal, and Joe Biden says we need a supply commander for the U.S.,” he said. He also noted that this is not the first crisis supply chain management has experienced since the discipline got its name in the 1980’s, starting with the earthquake in Japan in the 1990’s, followed by other natural events in the ensuing years. From each we’ve learned something, and we will learn something from this one as well. “Unlike other disciplines that go back hundreds of years, supply chain management is constantly changing,” he said. “After every crisis, we become better as a discipline.”

That will be true after this pandemic. “We are in an era-defining moment,” he said. “All of my meetings over the last month have been on Zoom and Google Hangouts. They’re digital. The same thing is happening in the supply chain. Where we were once analog with spreadsheets, we’re now going live with real-time data. If your data is old and analog, you don’t have visibility and you can’t execute. Supply chain management is poised to become the digital powerhouse that it was meant to be.” We have been moving in that direction anyway, as organizations launch pilots utilizing artificial intelligence, machine learning and robotics to name a few. The pandemic, and the uncertainty around what demand may look like going forward, will accelerate those changes.

Where should we focus? The huge opportunity, in Linton’s view, is not in optimizing supply chain nodes, but in compressing time. “A supply chain is all about material in motion, and that includes cash in motion and cash on the balance sheet,” he said. If you can ship information in real-time – live information – you can reset lead times and take inventory out of the supply chain. To illustrate his point, Linton suggested putting dots representing a supply chain network on a sheet of white paper. The dots represent 3PLs, manufacturing sites, ports, airports and the other supply chain nodes we’re all familiar with. Optimizing those nodes to reduce the total landed cost is analog thinking. They lead to incremental gains – that will always be important, but at a certain point, incremental gains don’t move the needle. The opportunity is to compress the white space between the nodes – that’s digital thinking.

What does that look like? As someone who once operated a very global supply chain, with 120 factories around the world, Linton said “we’re heading into a post global world. It was already happening before the pandemic, which is going to accelerate the move. That is not a bad thing for supply chains.” Instead of long, extended supply chains that take advantage of labor arbitrage, proximity will become more important. “What’s good for supply chain management – compressing the white space – is having everything in the same geography. That leads to more regionalization, nationalization and localization. The linkages between the supply chain, the balance sheet and revenue are facilitated by proximity.” For example, if a manufacturer moves its operations from China to Mexico, it is compressing the white space and taking time out of the supply chain.

Automation, whether we are talking about mechanical automation like robotics, or automated planning and inventory management, will also lead to making more efficient use of the white space. “A human operates on protection and fear,” Linton said. “If lead times are extending, a human will bugger more inventory and increase minimum order quantities. The machine doesn’t think, it just does. And, as these new applications begin to interact with each other autonomously, they’ll optimize the supply chain beyond what a human can do. And that takes time out of the supply chain.”

Perhaps most importantly, digitization allows a supply chain officer to get a new level of visibility. And without visibility, supply chains can’t improve. “When I took over as chief supply chain officer at Flex, I had 120 factories and the data was not all visible. I woke up to the reality that I would fail unless I did something different,” he said.

That was the message behind The Living Supply Chain, the book Linton co-authored with Handfield. The solution at Flex was the development of Flex Pulse, a digital platform that not only made supply chain activities visible, but also tied them to metrics such as operating income, financial management and customer satisfaction. “I you want to digitize your supply chain, you have to make it visible,” Linton said. “If you’re driving down the road with no gauges, how fast can you go?”