Education for Innovation (sm):  Supply Management @ MIT

Supply Management Vision at MIT

                 Bruce Arnzten heads the MIT Center for Transportation and Logistics  -  http://ctl.mit.edu/ and teaches global supply management.    “Our student body is like the UN, ten different countries are represented,” he says.  The program offers a 9-month Master’s Degree in Supply Management to students from around the world who come to the program with five to ten years work under their belt; their average age is 29.

MIT has always pioneered strong industry connections, starting with the Leaders in Manufacturing Program, the Industrial Liaison Program, and now this new global supply management degree. “We have cloned the center in Spain, also Kuala Lampur, Malaysia, and Bogota, Columbia.  It’s the beginning of a good network.  Students start off with the same courses that MIT teaches in Cambridge.  Although these four centers are not,” he emphasizes, “branches of MIT, but rather universities that we set up, we interview the faculty, select the teachers, and we support them.”

In January when most students are not in classes the program brings the whole gang together for a Poster Session, an evening of stand-up presentations on projects the Masters candidates will complete in the spring.  Armed with big white boards the candidates descend in teams on the Media Lab building to present their project proposals before a panel of judges who select the best, and to field questions from invited corporate guests looking for new hires.  The subjects are all the beautiful solutions that we have been waiting for years to see popularized –risk management, optimization, network simulation, hedging, and logistics cost analysis.  And they’re not all jammed on Excel spreadsheets!

The core courses that everyone starts with include: 

Analytical methods for supply chain management

Logistics systems

Case studies

Supply chain leadership

Information systems – data base, internet and systems integration

Small workshop on technical writing

Presentation skills.

Financial analysis

Systems analysis and systems dynamics

Of course the big grabber is the Master’s Thesis project.  Arntzen believes this is one of the program’s most powerful points.  “Forty-five companies belong to our center – great companies like BASF, Cardinal Health, Caterpillar, Chiquita, GE, GlaxoSmithKline, J&J, Intel, Goodyear, Ralph Laruen, Wal-mart.   We ask them if they would like to sponsor a Master’s thesis project. They come in and present to the students what they would like done, the students then vote – it’s a matchmaking exercise like the baseball draft.” 

It’s a well-engineered schedule that keeps things moving.  Mid-September the students fly off to visit their project company - Korea, Canada, Belgium, all over the world.  The work continues intensively until Jan. 19 Poster Day. 

The “Where’s My Stuff?” Question

Risk management is probably the most popular term among manufacturing and supply chain leaders today, thanks to the Honda WEK fire, the Toyota Aisin Seiki brake outage followed by tsunami and earthquakes.  We asked Arntzen where his group is on this challenge. 

“I’m leading a big research project at MIT on supply chain risk management.  Senior management tends to give lip service until there is a crisis – ‘a good crisis is a terrible thing to waste!’  But we have enormous difficulty getting resources and mindshare from senior management.  One big problem is that giant corporations have not systemically captured where their material comes from.  When you execute a purchase order, you get all sorts of neat info, where to send the money to, the characteristics, but there’s that one little piece - where it is made - that constitutes huge risk potential.  When the tsunami washed factories away, the problem got personal.  Companies were furious to determine where’s my stuff.” 

When big companies buy from second tier suppliers who buy assemblies from a third tier in Thailand, who buys piece parts from suppliers in India, who buy rubber from Brazil and aluminum from Africa, nobody can answer the question “where’s my stuff?”  So MIT is working to develop the answer.  Amazingly, although “Where’s my stuff?” is a very simple question, it’s going to take some high-level IT at MIT to provide the answer. And we need it sooner rather than later.  Manufacturing won’t and can’t come back to the US fast enough to eliminate the risk problem.

“Where’d my stuff come from?”

 Arntzen highlights another supply management question that MIT is working hard to deal with.  “It’s at the other end of the spectrum away from all the noise and attention and spin, and it’s the coming storm of standards and regulations.  Think about it – when we eat lunch we’re happy our cheeseburger has no bad bacteria in it.  However the standards world is also an industry -  people make a living doing inspections. There are hundreds of standards-issuing bodies, many of them competing to get their standards recognized.  There are lots of organizations trying to do standards on supply chain risk management.”  It’s blinding, with industry itself trying to figure out best practices and vocabulary at the same time that for-profit groups are racing to make money on it.

Risk Pathways

The key to “Where’s my stuff?” says Arntzen is “to change the process, capture data in searchable data bases, to figure out how can we modify and draw pictures of a supply chain and identify the risk pathways through the supply chain.”  That’s what Toyota and all the other at-risk multi-nationals need, but judging from Toyota’s latest response to the risk management ruckus – a call to suppliers to maintain more inventory stashes – they may not yet be on board with the MIT solution.

Is Toyota's announcement that they are doing global mapping the powerful IT solution from MIT?

                                 Nobu Morita:  "You can't run a global supply chain on kanban."

***