Chaotic but Critical: A Supply Chain Q&A

Ravi Srinivasan, Ph.D., professor of operations and supply chain management, specializes in supply chain innovation, technology, disruptions, and risk management. Before he started teaching, he spent nearly nine years implementing supply chain processes for firms across different sectors.

What are supply chains?

Every product or service we consume has a supply chain behind it. Supply chains are companies that come together to bring products or services to consumers. Think of a supply chain as a river: Upstream are suppliers, their suppliers, their suppliers, and so on. Downstream are customers and their customers until you reach the end consumers. You also have after-services like recyclers, trash collectors, etc.

Why would I be interested in supply chains?

Companies cannot make products or offer services without supply chains. No company is an island that can produce everything it needs. Producing a product or service is a team effort, and the team members are other companies. Each business assembles a team of other companies that can help them offer the highest quality product or service at the lowest possible cost. Each company must think about where to source their raw materials (procurement), how to produce their products (manufacturing), how to distribute them (logistics), and the data and information needed to achieve this (information technology).

How have supply chains changed over time?

Supply chains have existed since civilizations traded with each other. Products like silk or spices, like cinnamon and pepper, are sourced from around the world. In the past, only the rich many folks either directly or indirectly worked with the port. The bridge collapse increased road congestion and significantly reduced commercial ship traffic. The port reopened on June 12, but port authorities do not expect volume to return until 2025. enjoyed such products. Today, the average consumer enjoys products and services sourced from around the world. This is possible because supply chains have become global, production and distribution costs have considerably reduced, and technology has enabled us to track shipments and communicate easily with people worldwide.

What do modern-day supply chains look like?

The easiest way to describe modern supply chains is chaotic. Due to advances in logistics—such as shipping containers, large ships, tracking systems, and shipping channels—companies can get the best (or cheapest) raw materials or production processes from distant parts of the world. A simple $10 T-shirt, for example, is made by growing cotton in the U.S., transforming it into yarn in Indonesia, weaving the yarn into a T-shirt in places like Bangladesh, and then shipping it back to the United States. This is a simple product with one ingredient, cotton. Imagine a product like your cell phone, computer, or car. There are hundreds or thousands of parts that different suppliers in different parts of the world produce.

How important are Baltimore and the city’s port to supply chains?

Baltimore City and the port are vital for companies based in Maryland, Pennsylvania, Delaware, Virginia, and D.C., as well as for some automotive companies. The collapse of the Francis Scott Key Bridge earlier this year led to a huge dent in the local economy since many folks either directly or indirectly worked with the port. The bridge collapse increased road congestion and significantly reduced commercial ship traffic. The port reopened on June 12, but port authorities do not expect volume to return until 2025.

Why do business students study supply chains?

Supply chains are at the heart of every company. Marketing students think of the 4Ps (product, price, placement, and promotion); finance majors think of capital budgeting; accounting majors think about accounts payable, receivables, inventory, and unit price calculations; and information systems students think about data and technology. Their decisions impact a company’s operations and supply chain and how the company can serve its customers and leverage its suppliers’ capabilities and resources. In short, every entrepreneur and business major should be aware of their supply chains and how they can make or break their company.

What’s the future of supply chains?

The world will face significant challenges, such as climate change, rapidly changing technology, and shrinking and aging populations. Many companies have already started adapting to these challenges by embracing sustainability initiatives, leveraging technology, and globalizing their workforce. Understanding how these macro changes may impact global economies, supply chains, and their jobs will help students have successful and fulfilling careers.