Supply Chain Law of the Minimum

I just returned from my first-ever cross-country motorcycle trip from Rhode Island to San Diego and back. Some people said I was nuts to do this trip on a 20-year-old motorcycle, perhaps because I did my own mechanical work to get it ready. But bucket list items don’t check themselves, so off I went to couch surf with family and friends along much of the way, and it was fantastic! Such a trip makes a few observations about supply chains stand out.

Firstly, geography dominates supply chains. This really is a big, beautiful country, and everyone should at least once experience the changes to geography, climate, and diversity over the course of days of driving. And you will see many, many trucks, and along much of the way, you also see trains. Trucking and rail indeed are the life blood of our economy, and it literally takes DAYS just to drive across this continent. It takes a LOT of trailers and rail cars to move the quantity of goods mostly from Los Angeles to the rest of the country. The thin lines of asphalt and iron that are barely visible from a distance are fragile yet powerful arteries of our national economy. Telecommunications and electrical infrastructure tend to follow the highway and rail lines as well. We must ensure that these fragile threads crossing the vast expanse are maintained. Also, even in the middle of “nowhere”, well out of sight of even a single building, there were so many trucks that I often had to wait to get past them, so maybe we need a few more lanes of capacity.

Secondly, what’s up with Oklahoma? I had no idea there were tolls in Oklahoma. I should have paid more attention to the GPS, but even if I had, it wouldn’t have occurred to me that they would only take cash in this day and age. Given the heavy traffic, especially of trucks, we can expect more toll roads to appear. There’s no way that a gas tax increase will be politically palatable—indeed, recent events with our infrastructure bill recognize what has been true for a while: the gas tax is no longer a viable funding model. With vehicle efficiency improving, as well as a shift to electric, paying for roads is a burden shifting increasingly away from gas taxes and toward local and state governments. The economic impact of good roads can be amazing, but they are expensive both to build and to maintain properly. This will likely result in more tolls and maybe a miles-driven-based taxation scheme.

Thirdly, very few of the “24-hour” restaurants I stopped at for an early morning breakfast were open. Most hotels had stopped doing breakfast or had poor breakfasts, so I was counting on some of the hearty breakfasts traditionally served along American highways. But more than half the mornings my empty stomach was greeted by signs saying that hours were reduced due to lack of employees. I’m guessing the lack of breakfasts at hotels resulted from the same labor issue. Sitting in front of an expensive and new restaurant building that was dark and quiet really drove home the importance of people. With all the hullabaloo these days about technology and digitization, all those capital investments exist to multiply the capability of the workers. No workers, no capability—we’re still a long way from completely autonomous facilities, if they ever happen. I have a couple of children who work in food service, I don’t blame anybody who wants better (and cleaner) work for better pay and benefits, and that’s without even considering the many “challenging” customer service interactions.

This last thought keeps coming back. For years, I’ve been shocked at how little companies invest in training and talent development, preferring to hire new workers who already have skills and experience. I’ve seen it among the thousands of students who’ve graduated on my watch: companies clearly invest the minimum in them, and the students return the sentiment. I encourage my students to shop jobs because, sadly, that’s the most effective strategy to get paid their worth, as the company they’re in always seems to refuse to increase their pay as they gain experience and demonstrate their value. I talked to a manager this morning who complained about pay disparities greater than 50% for subordinates doing the same job, with almost no correlation with performance, experience, or education; naturally, turnover is high and morale is low, yet HR remains committed to its obscure formulas that seems focused on paying the least. In other words, companies treat these developing professionals as disposable. The end result is predictable: too many openings for too few workers, and intensifying competition for a pool of qualified workers that keeps shrinking due to diminishing opportunities to gain training and experience. The labor market has only just begun to punish companies for incompetent labor relations.

Speaking of incompetent labor relations, I get too many calls from students who graduated years ago who need help and advice on how to move up the corporate ladder because they aren’t getting mentorship and training. I’m always happy to help current and former students, but where’s the culture of excellence and continuous improvement that characterizes successful organizations? It isn’t entirely gone, yet it seems like managers don’t manage and often are too busy to actually know what their subordinates are doing, or what’s going on in the trenches. Are they really managing at all? Conversations with management makes me think that too much time is spent in meetings and talking about work, and not enough on developing resources, people, and processes to actually get work done.

As a last thought, when you’re on a motorcycle, weather matters a lot. Crossing the Arizona desert during a 116-degree heat wave taught me how a rotisserie chicken feels. Even in mild temperatures, the gradual yet incessant wind is wearing at the end of twelve hours of riding. These thoughts occupied my mind on the last day of my trip as I rode through hours of downpouring rain and wind. As the odometer turned over the 7,079th mile, I rolled into the garage, soaking wet and feeling the beginning stages of mild hypothermia. That’s when I noticed that the magnetic bag stuck to my tank was gone—I had been too busy fighting the wind and the spray to notice that it had blown off. My attentiveness was my scarcest resource, and it had all been required merely to ensure my survival. In the end, Liebig’s Law of the Minimum rules: growth is not determined by the total amount of resources, but rather it is limited by the scarcest resource. Successful supply chain leaders understand that good people are the scarcest resource.

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