For a half century, the MIT Center for Transportation & Logistics (MIT CTL) has made an intensive study of global supply chains, or what the center’s director, Yossi Sheffi SM ’76, PhD ’78, the Elisha Gray II Professor of Engineering Systems at MIT, describes in the title of his new book as the “magic conveyor belt.”
This subject area, Sheffi acknowledges, wasn’t something the average person ever gave much thought to. Then came Covid-19.
MIT CTL, which Sheffi calls “one of the really hidden gems” at the Institute, is marking its 50th anniversary this year. The term “supply chain” hadn’t yet been coined when it was founded as the Center for Transportation Studies in 1973. For the last half century, the center has studied, innovated, and facilitated the supply and delivery of materials and goods around the world.
The center’s Global Supply Chain and Logistics Excellence (SCALE) Network encompasses six centers on four continents, more than 80 researchers and faculty members across multiple disciplines, and more than 150 corporate partnerships; its academic programs serve more than 170 students annually and count some 1,000 alumni worldwide.
This year also marks the 25th anniversary of the MIT Supply Chain Management Master’s Program, the first postgraduate education program specifically designed for supply-chain and logistics professionals. Sheffi is the program’s founding director.
“We defined the problems, not only the solutions,” Sheffi says. “We were talking about sustainability 25 years ago. We were the first ever to talk about supply-chain resilience, so we’re doing a lot of research in this area that now suddenly has been discovered, especially after the pandemic.”
“Our researchers are expected to work with companies, work with real data, and yet publish in the best journals. And they do. So, year in, year out, our center is number one in the world.”
The center’s anniversary celebration coincided with the April 2023 release of Sheffi’s ninth book, The Magic Conveyor Belt: Supply Chains, A.I., and the Future of Work, which examines how supply chains have been affected by the societal and economic shocks of the early 2020s.“Maybe I have a one-track mind, but I see the world through a supply-chains prism,” he says.
His book argues that the global supply chain actually worked quite well during the pandemic. “Let’s talk about the food supply chain,” Sheffi says. “From one day to the next in March 2020, all restaurants were closed, all universities were closed, all industrial parks were closed. This is half the food in the United States. “Supply-chain managers did heroic things,” he says. “As part of CTL’s 50th anniversary, we interviewed the CEO of Procter & Gamble.
During the pandemic, they sold lots of Tide and Pampers, but they could not get the ingredients. Usually, it takes them six to 12 months to change the formulation of a laundry detergent.They did it in days. The quality didn’t change, but the ingredients every other week were different. People don’t realize what it takes to do something like this. You have to do quality control, you have to test it, you have to adjust the machinery. It was done. Nobody knew about it.
“Once you understand what’s involved in the global supply chain and how it works, you are not complaining about something that you don’t find on the shelf, or that doesn’t get from Amazon to your home,” Sheffi says. “You are awed when something actually makes it, because you realize how complex this is.”
His book addresses the impact of artificial intelligence (AI) and other advanced technologies on the jobs involved in the manufacture and distribution of goods. “There will be jobs,” he declares. From the Industrial Revolution that replaced master weavers with mechanical looms, through the rise of the automotive assembly line and the advent of the automatic teller machine, he asserts, more jobs have been created as a result of technological revolutions than have disappeared.
If AI comes to be used more and more in guiding the flow of goods along the global supply chain, Sheffi says, there will be a growing need for trained people to monitor algorithms and guard technology against cyberattacks.
He cites the example of the London cab driver. This profession once demanded years of study to master what was called “the knowledge,” dating from the days of horse-drawn carriages. Drivers were required to pass a demanding examination about London’s streets, roads, and landmarks to demonstrate that they could get anywhere in the city.
With the arrival of Uber and the GPS app, this skilled profession was immediately de-skilled, he says. “De-skilled positions at one point will get automated,” he continues. “We will have robo-taxis. But there’ll be a lot more taxis, a lot more people— augmented by technology—building them, maintaining them, and ordering them. Getting from one place to another will be a lot easier, and more economic activity will result. Furthermore, with AI the world is likely to experience new industries with new jobs. One of the reasons for the anxiety is that we all know the jobs and people who might be replaced. They are our neighbors, our family members, our colleagues. We do not know the new jobs and what it will take to perform the tasks involved.”
While it will be necessary for many workers to be “upskilled,” Sheffil maintains there are numerous ways to accomplish this. Furthermore, he adds, the human touch will remain necessary in an age of increasing automation: “Empathy and relationships will be even more important in the world managed by algorithms,” he says. “I cannot envision somebody making contact with a Chinese, Vietnamese, or Argentinian supplier without going there, negotiating, having dinner, talking about the kids, talking about the school.
“And why is this important? Because when something goes wrong, you want this person in Argentina or Shenzhen to know you, and what you need. Relationships are important, and I don’t think this is going away.” — Mark Sullivan