Dr. Chris Caplice wants to make supply chain education freely available to anyone, anywhere. More than 150,000 people from 190 countries have taken him up on that offer so far.
Before Chris Caplice, executive director of the Center for Transportation and Logistics at the Massachusetts Institute of Technology (MIT), got involved in supply chain management, he was a civil engineer. He's still passionate about identifying problems and solving them with an engineer's quantitative approach. Today, though, he's applying his considerable analytical skills to a new area: not just what is taught in supply chain management (SCM), but how it is taught.
As a leading proponent of online education in SCM, Caplice has worked with colleagues to design, implement, and teach a variety of online courses at both the undergraduate and graduate levels. The aim: to use technology to make high-quality supply chain education available to anyone, anywhere in the world. Through the new MicroMasters in Supply Chain Management program he leads, this vision is expanding beyond MIT to include a variety of programs at more than a dozen other universities.
For his leadership in making educational opportunities in supply chain management more widely available, Caplice received the 2016 Distinguished Service Award (DSA) from the Council of Supply Chain Management Professionals. The organization's highest honor is given to an individual for significant achievements in the logistics and supply chain management professions.
Caplice recently spoke about innovations in education with Supply Chain Quarterly Editor Toby Gooley.
Name: Chris Caplice, Ph.D. Title: Executive director, Center for Transportation and Logistics (CTL); founder, MIT FreightLab; chief scientist, Chainalytics Organization: Massachusetts Institute of Technology Education: Doctorate in transportation and logistics systems, MIT; Master of Science in civil engineering, University of Texas at Austin; Bachelor of Science in civil engineering, Virginia Military Institute Recognitions: 2016 CSCMP Distinguished Service Award and 1996 Doctoral Dissertation Award; 2016 MIT Silver Family Research Fellow Previous Experience: Taught at Virginia Military Institute; senior management positions, Logistics.com, SABRE, and PTCG; U.S. Army Corps of Engineers CSCMP Member: Since 1994
What are your responsibilities at the Center for Transportation and Logistics? How does CTL fit with other programs at MIT?
CTL is an interdepartmental center that focuses on all issues related to supply chain management, logistics, and freight transportation. We do three things: education, business partnerships/corporate outreach, and research. ... We have a great team of researchers and faculty, so my main responsibility is just ensuring that all the programs work together!
You may have noticed that there is no Department of Supply Chain Management here. One of the benefits of CTL being independent and interdepartmental is that we're able to bring different disciplines to bear on the field. That frequently includes the Media Lab, the School of Engineering, the Sloan School of Management, urban planning, and others. The fun thing is that we can tie so many different disciplines together.
Are you working on any major research projects?
In the past couple of years I've mostly focused on developing online education, but there are three other projects that I've been involved with. We just finished a project called "Voice of the Machine" with Drs. Francisco Jauffred and Daniel Steeneck. With the advent of the Internet of Things, we can now get signals such as diagnostic tests from equipment in the field. We worked with a company called OnProcess Technology to gather signals from machines' self-diagnostic tests and see if we can do anything proactively with them. We found that while the ability to predict one machine failing is weak, over a long period, and in the aggregate, the machines give us good signals we can use to allocate service-parts inventory and potentially reduce safety stock by up to 10 percent.
A second project was with a large restaurant chain. Every restaurant has restrictions on how much it can store in the backroom. If you devote more square feet there, then you don't have that square footage out in front. We wanted to know how that could affect service levels. As demand increases, do we have to increase the size of the storeroom, or can we make it more efficient? How do pack size and delivery frequency affect service levels? We're trying to determine the optimal order-stocking frequency. This is becoming more relevant for retailers, because with omnichannel the backroom is now serving multiple purposes.
A third project concerns better synchronization of transportation flow with inventory flow. Suppose I have different transportation options, and each has different costs, transit time, lead time, and capacity. How do I select the best mode—ahead of time, in my contracting—to best handle varying demand? Tied to that is inventory: some stock-keeping units (SKUs) are predictable, while others are not. Is there a way to synchronize both of these flows, and can I allocate the right SKUs to the right mode in advance?
CSCMP described you as leading the charge in "democratizing supply chain knowledge." What does that mean to you, and why is it important?
Higher education is facing a major decision. The way we teach in graduate school hasn't changed in 100 years: we lecture to a room of students; assign them a problem set, which they turn in two weeks later; and then we grade it and give it back to them two weeks after that. So after a month they get feedback. Does that still work today?
We're pushing ourselves to find out if we can deliver high-quality, graduate-level education that can be accessed by anyone across the world. For example, through edX [an online learning system founded by Harvard University and MIT] we want to educate the world for free. People should be able to get the knowledge they need—that's rule number one. Sometimes people want certification that they have mastered certain knowledge and skills. So, our second rule is to credentialize at cost. This cannot be done for free since it involves a lot more effort and work. Our third guiding rule is to be able to work with companies to customize the courses to fit their specific needs. We're finding that companies don't always want courses exactly as we created them; they choose modules and blend them to meet their own needs.
How does the new MITx MicroMasters credential in Supply Chain Management program work?
Over the past two years, more than 150,000 unique people from 190 countries have registered for at least one online course in supply chain management. In addition to demand for these courses there was tremendous demand for a formal MIT degree. So, in October of last year MIT President Rafael Reif announced the launch of the MicroMasters Credential, with our supply chain program being the very first. To earn the credential, students have to successfully complete a series of five courses and pass a final, proctored exam. If they are accepted to MIT, we will award them approximately one semester of credit. This is the first time MIT has awarded credits for online courses. It's online, but it still has the rigor and depth of graduate-level work. Also, through edX we are now offering about 20 different MicroMasters courses in a variety of subjects across about a dozen universities.
One thing we've learned is that there's no one best way to teach everything. There is a whole continuum, a portfolio of teaching methods, and you have to match that to the content and to the audience. For instance, we found that an analytical method like how to set inventory levels is best taught not necessarily in a lecture hall but via video. Students can move at their own pace; they can stop, start, and review as often as they need to. However, other things are best taught face-to-face, like case studies using the Socratic method, where students debate among themselves. Educators are realizing that for online teaching as well as in-residence graduate and executive education, it's more effective to do the prep work first, and then have face-to-face learning and discussion.
Launching the MicroMasters Credential required you to champion massive online open courses (MOOCs). How successful have they been?
The number of of registrations for an online course can be huge, and the number of people who are seriously doing something with it much smaller. After all, there is no charge, so the "cost" of registering is just a click. The number of registrants who are paid, verified students who want to be credentialed is averaging 12 percent for our courses. Those who are paid and verified tend to score higher on average, and by orders of magnitude are more likely to complete the course. We've awarded over 11,000 course certificates to almost 7,000 individual students over the past two years. To put this number in scale, I would have to teach for almost 100 years to reach this many students using traditional methods!
Container imports at U.S. ports are seeing another busy month as retailers and manufacturers hustle to get their orders into the country ahead of a potential labor strike that could stop operations at East Coast and Gulf Coast ports as soon as October 1.
Less than two weeks from now, the existing contract between the International Longshoremen’s Association (ILA) and the United States Maritime Alliance covering East and Gulf Coast ports is set to expire. With negotiations hung up on issues like wages and automation, the ILA has threatened to put its 85,000 members on strike if a new contract is not reached by then, prompting business groups like the National Retail Federation (NRF) to call for both sides to reach an agreement.
But until such an agreement is reached, importers are playing it safe and accelerating their plans. “Import levels are being impacted by concerns about the potential East and Gulf Coast port strike,” Hackett Associates Founder Ben Hackett said in a release. “This has caused some cargo owners to bring forward shipments, bumping up June-through-September imports. In addition, some importers are weighing the decision to bring forward some goods, particularly from China, that could be impacted by rising tariffs following the election.”
The stakes are high, since a potential strike would come at a sensitive time when businesses are already facing other global supply chain disruptions, according to FourKites’ Mike DeAngelis, senior director of international solutions. “We're facing a perfect storm — with the Red Sea disruptions preventing normal access to the Suez Canal and the Panama Canal’s still-reduced capacity, an ILA strike would effectively choke off major arteries of global trade,” DeAngelis said in a statement.
Although West Coast and Canadian ports would see a surge in traffic if the strike occurs, they cannot absorb all the volume from the East and Gulf Coast ports. And the influx of freight there could cause weeks, if not months-long backlogs, even after the strikes end, reshaping shipping patterns well into 2025, DeAngelis said.
With an eye on those consequences, importers are also looking at more creative contingency plans, such as turning to air freight, west coast ports, or intermodal combinations of rail and truck modes, according to less than truckload (LTL) carrier Averitt Express.
“While some importers and exporters have already rerouted shipments to West Coast ports or delayed shipping altogether, there are still significant volumes of cargo en route to the East and Gulf Coast ports that cannot be rerouted. Unfortunately, once cargo is on a vessel, it becomes virtually impossible to change its destination, leaving shippers with limited options for those shipments,” Averitt said in a release.
However, one silver lining for coping with a potential strike is that prevailing global supply chain turbulence has already prompted many U.S. companies to stock up for bad weather, said Christian Roeloffs, co-founder and CEO of Container xChange.
"While the threat of strikes looms large, it’s important to note that U.S. inventories are currently strong due to the pulling forward of orders earlier this year to avoid existing disruptions. This stockpile will act as an essential buffer, mitigating the risk of container rates spiking dramatically due to the strikes,” Roeloffs said.
In addition, forecasts for a fairly modest winter peak shopping season could take the edge off the impact of a strike. “With no significant signs of peak season demand strengthening, these strikes might not have as intense an impact as historically seen. However, the overall impact will largely depend on the duration of the strikes, with prolonged disruptions having the potential to intensify the implications for supply chains, leading to more pronounced bottlenecks and greater challenges in container availability, " he said.
A coalition of freight transport and cargo handling organizations is calling on countries to honor their existing resolutions to report the results of national container inspection programs, and for the International Maritime Organization (IMO) to publish those results.
Those two steps would help improve safety in the carriage of goods by sea, according to the Cargo Integrity Group (CIG), which is a is a partnership of industry associations seeking to raise awareness and greater uptake of the IMO/ILO/UNECE Code of Practice for Packing of Cargo Transport Units (2014) – often referred to as CTU Code.
According to the Cargo Integrity Group, member governments of the IMO adopted resolutions more than 20 years ago agreeing to conduct routine inspections of freight containers and the cargoes packed in them. But less than 5% of 167 national administrations covered by the agreement are regularly submitting the results of their inspections to IMO in publicly available form.
The low numbers of reports means that insufficient data is available for IMO or industry to draw reliable conclusions, fundamentally undermining their efforts to improve the safety and sustainability of shipments by sea, CIG said.
Meanwhile, the dangers posed by poorly packed, mis-handled, or mis-declared containerized shipments has been demonstrated again recently in a series of fires and explosions aboard container ships. Whilst the precise circumstances of those incidents remain under investigation, the Cargo Integrity Group says it is concerned that measures already in place to help identify possible weaknesses are not being fully implemented and that opportunities for improving compliance standards are being missed.
By the numbers, overall retail sales in August were up 0.1% seasonally adjusted month over month and up 2.1% unadjusted year over year. That compared with increases of 1.1% month over month and 2.9% year over year in July.
August’s core retail sales as defined by NRF — based on the Census data but excluding automobile dealers, gasoline stations and restaurants — were up 0.3% seasonally adjusted month over month and up 3.3% unadjusted year over year. Core retail sales were up 3.4% year over year for the first eight months of the year, in line with NRF’s forecast for 2024 retail sales to grow between 2.5% and 3.5% over 2023.
“These numbers show the continued resiliency of the American consumer,” NRF Chief Economist Jack Kleinhenz said in a release. “While sales growth decelerated from last month’s pace, there is little hint of consumer spending unraveling. Households have the underpinnings to spend as recent wage gains have outpaced inflation even though payroll growth saw a slowdown in July and August. Easing inflation is providing added spending capacity to cost-weary shoppers and the interest rate cuts expected to come from the Fed should help create a more positive environment for consumers in the future.”
The U.S., U.K., and Australia will strengthen supply chain resiliency by sharing data and taking joint actions under the terms of a pact signed last week, the three nations said.
The agreement creates a “Supply Chain Resilience Cooperation Group” designed to build resilience in priority supply chains and to enhance the members’ mutual ability to identify and address risks, threats, and disruptions, according to the U.K.’s Department for Business and Trade.
One of the top priorities for the new group is developing an early warning pilot focused on the telecommunications supply chain, which is essential for the three countries’ global, digitized economies, they said. By identifying and monitoring disruption risks to the telecommunications supply chain, this pilot will enhance all three countries’ knowledge of relevant vulnerabilities, criticality, and residual risks. It will also develop procedures for sharing this information and responding cooperatively to disruptions.
According to the U.S. Department of Homeland Security (DHS), the group chose that sector because telecommunications infrastructure is vital to the distribution of public safety information, emergency services, and the day to day lives of many citizens. For example, undersea fiberoptic cables carry over 95% of transoceanic data traffic without which smartphones, financial networks, and communications systems would cease to function reliably.
“The resilience of our critical supply chains is a homeland security and economic security imperative,” Secretary of Homeland Security Alejandro N. Mayorkas said in a release. “Collaboration with international partners allows us to anticipate and mitigate disruptions before they occur. Our new U.S.-U.K.-Australia Supply Chain Resilience Cooperation Group will help ensure that our communities continue to have the essential goods and services they need, when they need them.”
A new survey finds a disconnect in organizations’ approach to maintenance, repair, and operations (MRO), as specialists call for greater focus than executives are providing, according to a report from Verusen, a provider of inventory optimization software.
Nearly three-quarters (71%) of the 250 procurement and operations leaders surveyed think MRO procurement/operations should be treated as a strategic initiative for continuous improvement and a potential innovation source. However, just over half (58%) of respondents note that MRO procurement/operations are treated as strategic organizational initiatives.
That result comes from “Future Strategies for MRO Inventory Optimization,” a survey produced by Atlanta-based Verusen along with WBR Insights and ProcureCon MRO.
Balancing MRO working capital and risk has become increasingly important as large asset-intensive industries such as oil and gas, mining, energy and utilities, resources, and heavy manufacturing seek solutions to optimize their MRO inventories, spend, and risk with deeper intelligence. Roughly half of organizations need to take a risk-based approach, as the survey found that 46% of organizations do not include asset criticality (spare parts deemed the most critical to continuous operations) in their materials planning process.
“Rather than merely seeing the MRO function as a necessary project or cost, businesses now see it as a mission-critical deliverable, and companies are more apt to explore new methods and technologies, including AI, to enhance this capability and drive innovation,” Scott Matthews, CEO of Verusen, said in a release. “This is because improving MRO, while addressing asset criticality, delivers tangible results by removing risk and expense from procurement initiatives.”
Survey respondents expressed specific challenges with product data inconsistencies and inaccuracies from different systems and sources. A lack of standardized data formats and incomplete information hampers efficient inventory management. The problem is further compounded by the complexity of integrating legacy systems with modern data management, leading to fragmented/siloed data. Centralizing inventory management and optimizing procurement without standardized product data is especially challenging.
In fact, only 39% of survey respondents report full data uniformity across all materials, and many respondents do not regularly review asset criticality, which adds to the challenges.