Our capacity has been constrained, our infrastructure has been old and not updated to say the least and whether it's from a capacity, whether it's from the quality of the infrastructure, that is not kept up with the changing nature of our supply chains, both in terms of demand, but also in terms of requirements. So what we see right now are events and issues that are exposing some of those gaps that we've had over time. We've been working and operating based on systems and assumptions of the past, yet everything around this has changed. And we're suddenly surprised that those supply chains no longer can support what we're wanting them to support us at this point.

Wood: Mm-hmm. No, I absolutely agree. I think about something that is local to me, and that is the Indianapolis wastewater system. And something that's been in the news and that we've been talking about is this wastewater system was developed in the early 1900s, and it's just not able to keep up with the volume of the city and the amount of people who live here. And so it's just not able to keep up with it. And I think the same thing is what you're talking about. All of these structures that are less movable, they're actual structures in place where we've got, whether it's the energy grid or whether we've got roads or highways or even railways, the way that we tried to approach the supply chain didn't really factor in the need for agility or the need for modernization. And so we've been stuck with those different abilities and different practices over the years, building supply chains that are now digital and automatic and all these other things that are more modern, but we're still working with things that are outdated.

Omar: And I'll give you an example. Again, let's, let's take a step back to just look at the historical progression of our supply chains because thirty or forty years ago when global trade started picking up and we got into the, you know, late eighties, early nineties, and then the 2000 with the.com boom and the internet and everything. Uh, our supply chains at that point were geared towards efficiency and cost, whether it's going out to get advantage of low-cost locations, whether it's Asia, Southeast Asia, Mexico, and other locations. And at that point, one of the philosophies that came up that was very popular, that was introduced by Tuora and then followed by others, was the just-in-time inventory, which was great for reducing costs because it's operating based on minimum cost, minimum waste, but at the same time, it wasn't great for absorbing shocks. And over the last twenty or thirty years, those shocks existed. So again, COVID was just an extreme example of that. Paris is just an extreme example. But those shocks existed. In 2011, we had forty percent of the production of hard drives at that point were coming from Thailand. Forty percent of the demand. And floods wiped out some of those factories. And everybody came to a standstill, including HP and Dell at that point overnight, because again, forty percent of that production stopped. There was an earthquake in Japan in 2011 and then more and more examples throughout time. And what we've realized is in again, 2020, 2022, 2025, supply chains were not broken at that point. They were over optimized for situations and assumptions that no longer exist. They no longer exist because the geopolitical landscape has changed. Talent and mindset and philosophies that's working on those supply chains is still operating based on other assumptions and the infrastructure has not kept up. So you've got a perfect storm that keeps coming into play every single time and we keep getting some of those shocks wave after wave. And what's been happening is we've been overreactive to those waves. We've been overreactive because we're not thinking of how we deal with this new landscape, with this new environment, with this new geopolitical landscape in a supply chain that can operate with them as opposed to let's figure out a short fix, a quick fix to some of those problems based on my supply chain that's operated over the last thirty or forty years in that same infrastructure and with that same mindset.

Wood: Mm. So it's a shift from being reactive to disruption and needing to be more proactive and strategic in planning out what a supply chain is going to look like.

Omar: Correct, correct. And thinking of with the supply chain, again, thinking of what else needs to be taken into consideration in terms of, again, we talked about geopolitical landscape, that has changed. The risk factors, that has changed, and that just keeps on going. And our mindset, even to understanding risk, has always been thinking of which events will take place. And that's a fundamental flaw because I don't care what that event is. I care more about the outcome. maybe, and hopefully COVID doesn't happen again, but I'm still going through many disruptive events. Again, we talked about the ship stuck in the Suez Canal. We talked about the issues in the Gatun lakes that are impacting the Panama Canal and the flow of cargo in that. between the Panama Canal and the Suez Canal, we're talking about close to eighteen or twenty percent of global trade that's being impacted by different reasons. Even if that's not happening, there's an issue of tariffs and how do people shift their productions and capacities from other locations where they're not getting hit with additional costs. So regardless of what those events are, we're not thinking of risk in the best way.

So taking into consideration how geopolitical landscape is shifting, how do you manage risk? How do you look at considerations of sustainability? Sustainability in terms of carbon footprint, circular economy, ESG audits reporting. Sustainable sourcing, all of those requirements have changed in the last fifteen to twenty years. And do we have the right people to look at this? Two more areas includes cybersecurity risks. And the reason we talk about cybersecurity risks is two thirds of successful breaches happen through a third party.

Omar: And we talked about geopolitical, which includes international trades, understanding of political environment, sustainability, reporting, ESG footprint, circular economies, risk management, cybersecurity, but also behavioral sciences. How do people respond? You know, we've seen the panic buying, hoarding, bull effects, all of that. And how do you manage, how do you address some of those behavioral aspects from consumers? So now you're looking at the multidisciplinary approach to managing a supply chain as opposed to a purely driven inventory policy system. A purely driven networking optimization. That's all important in terms of looking at those policies, but it's no longer sufficient to focus just on those aspects.

Wood: Absolutely. It's not as simple as that anymore. It's not as simple as just having a logistics or an engineering expertise in order to be a part of the supply chain development. There has to be so many other things that are taken into consideration. Were these things just not considered before? mean, clearly, having communication and being able to read your customers and understand what their buying habits are going to be. Surely that existed fifty, sixty years ago. It just looks different.

Omar: It looks different and I think it's operated in silos, right? As we look at trade policies, that's never been considered as part of supply chain implications strategy and decision making. As we look at risk or even cybersecurity risk, that's not really looked at from a supply chain standpoint. That's maybe looked from a compliance, from a risk standpoint, that's a separate office, it's a standalone. So each one of those areas have always existed. But we've never looked at it from a supply chain perspective. And I think that's the biggest shift in mindset. That's one area. The other area is being proactive about all of those things. for example, when we talk about risk, how do you think about the next disruption and are we ready for the next disruption? Or are we still trying to manage the previous disruption, get out of it safe—thank God we've just gotten away with, you know, five percent losses and twenty percent losses, so let's move on, it’s business as usual tomorrow. So how do you preempt? Because managing risk does not start when that event takes place. It happens a few years earlier when you're ready to deal with that disruption. So all of those areas existed, but we've never looked at it. And again, I'll come back to the cyber risks and supply chains. So two thirds of the breaches happened through a third party, but we've never looked at that in terms of understanding where the weakest link is. And why is that important? Because now I can look back at my cybersecurity investments and model those investments accordingly based on where the weak links are. So I can come to you and say, Ellen, I've got a great proposition for you in terms of your cybersecurity investments. You can actually spend less. So let's say you're spending a hundred dollars this year. You can spend ninety instead of a hundred. And from those ninety, we're going to carve out some of that budget to some of the weak links in our supply chain, which sounds counterintuitive to a lot of managers. But in reality, you're elevating all of your defense systems across your whole network because that's where you're going to get the successful breach from those weak links in your supply chain. And again, there's a list of many companies that have been breached in those ways. And those are the ones we know about. We always joke is there's two types of companies. Those have been successfully breached and they know it. And those have been successfully breached, but they don't know it. So, it's happening. You think now, you take that into consideration and you think of the explosion of use of technology moving forward. Is that slowing down? Is that increasing? And I think we all can agree that that's not slowing down anytime soon. That's going to continue to increase.

And with that, that means more and more companies, suppliers and networks are going to be exposed to some of those risks. So one of my colleagues and I have worked on a research on that space. And again, to your point, some of those areas are not new. We've used a model that's used by the DOD that's called the attacker defender model that looks at which assets are important to protect, which assets are we're saying we don't have enough resources to protect. So it's really not recreating new disciplines or new sciences, but it's connecting the dots between all of those different sciences in a multidisciplinary approach to say, as we manage supply chains, it's no longer the supply chain of the past of moving boxes and moving trucks. It's a much more complex system that has massive implications. Think of this as across the world, across all companies, annually we get around 1.1 trillion dollars of obsolete excess inventory, lost inventory, poor management of inventory, 1.1 trillion, right? Think of what this means now if we put all of those different aspects together and just slicing this, know, smashing this down by ten, twenty, thirty percent. You get fifty percent of, again, I'll give you one more anecdote and we can move on in the conversation, but one of the fifty percent of vaccines are destroyed because of poor management of refrigerated supply chains and cold supply chain systems and networks. And a big part of that is not necessarily not knowing what kind of networks to run and optimize, but it's understanding the dynamics and how do you manage that disruption and change in demand and getting that visibility with a new system and new infrastructure. A lot of the companies still operate based on existing distribution centers and networks and warehouses that have existed for the last fifty, sixty, and seventy years. And the question is, are they still capable to manage that disruption and change in flexibility and agility that we need today. We know the answer to that, but we need to start moving along those lines.

Wood: So can you give an example of how a minor local disruption could ripple into that disruption that has global consequences? And what does that tell us about the supply chain's design? Because we're talking about it in generalities right now. What's an example of something that could blow up into that type of disruption?

Omar: Sure. Thinking of local and local depending on where you are for, of course, right? But I'll give you an example. Like once again, we mentioned the Suez Canal. One ship stuck in the Suez Canal have a major disruption across global trade. Twelve percent of global trade, 10 billion dollars’ worth of goods per day and disruption leading to months of supply. In 2021, we had the Texas winter storm, right? That's a winter storm impacting plants in Texas, well, what has that got to do with now we've got impact on plants that are making resins used in plastic packaging. That's a global shortage in medical devices, car parts, food packaging, and so on and so forth.

Omar: I can give you more examples, again, think of the recently last year when we had, was it last year or the year before when we had those storms in North Carolina and it shut down a lot of the suppliers for the pharma industry and it impacted the manufacturing of vaccines. Again, it's a storm impacting one plant in one location, but it has a major domestic and global impact everywhere. And it's not, we can no longer isolate some of those events and we can't stop some of those events. But the question is once a manufacturing facility stops somewhere or we can get products from it for whatever reason, it could be a storm, could be a labor strike, it could be other issues. Once we have a struggle with one of those locations, are we set up in a way to pivot to a different geographic location and get those supplies? For most companies, the answer is no. We're not set up for that. And that's why we start having that stress in the system.

Wood: Right. So as we look ahead, how are you teaching the future supply chain leaders to rethink about these systems and not just react to disruptions, but to really design them and build them with that resilience in mind? What is the change that we're having to teach?

Omar: So I think the number one aspect of this is the mindset of we're going to have disruption. Do not do not spend all of your time and energy of thinking, is this event going to repeat or not? If it's not going to repeat, I'm good. I'm fine, at the, know, historically, we've looked at something called total landed cost. Right. Now we need to think about something else called total landed risk. So the total landed risk now I'm taking risk into consideration because that risk, that disruption is going to impact my cost. So I'm still thinking about cost, but I'm thinking of that from a completely different angle and domain. One is to reduce cost, but even better in getting away now from that reactive mode and going onto full attack is being, you know, looking at opportunities, your ability to move and pivot quickly and move, not necessarily pivot back to the same state your supply chain was in before the disruption. Maybe move to a different state, move to a new place. Your ability to move faster than others, that creates a competitive advantage, that creates an opportunity. With every problem, there's always an opportunity. And if we all agree that, again, we can look at in the last three years, five years, 10 years, the frequency of disruptive events and the impact of those disruptive events. And it's going to be very clear in terms of the pattern moving forward. What should we expect? I think that gets us to that understanding of we need to manage disruption in a way that's proactive. How do you do that is again, it depends on every company product and so on, but going away from single sourcing, going to multiple regions, thinking of understanding that at some point one part is going to feed in the system.

Wood: Mm-hmm.

Omar: How do we pick up the slack? Even if it costs us a little bit more now, the total landed risk is lower and thus the total landed cost is lower. Otherwise, we're micro-optimizing for a supply chain that's not gonna be the case. We're always assuming that that's gonna operate ideally based on certain assumptions, but that's not the case moving forward. So planning for disruption, understanding what systems you've got in terms of redundancies, dual sourcing, multiple sourcing, or other ways to pick up some of those disruptive areas. And thinking of that from a strategic standpoint, from a competitive advantage standpoint, as opposed to from a reactive trying to reduce costs after something takes place. When that takes place and you're not ready, it's too late and you're just picking the best of all of the worst options.

Wood: Mm-hmm. Yep. Having the forethought to even consider that a scenario is possible and then probable and what those reactions are going to be is definitely going to make the difference when it comes to having to face those. And I think that the creativity that comes in those workshops and those brainstorming sessions of how are we going to fix this? What are we going to do? Does it mean going to a different supplier? Does it mean moving production from this place to this other geography? All of those things bring the right minds to the table. I have to hope that there's also that creative agility there to say, well, this disruption is not exactly what we planned. But if we combine the plans from this disruption and this other disruption, we can still come up with a solution much faster than had we never considered that something was going to go wrong. think that's one to your point. Businesses plan on things going right. They have goals. They have benchmarks they're trying to reach, but they're just looking at how do we make it happen, not how do we deal with what's going to stop us.

Omar: That's a great point is, and that's where we push students towards is how are you, how do you become comfortable with chaos to a certain degree? Right? Because you'll get into that doesn't mean that you start with no plan or no strategy or nothing in place. That's not that's not the point. The point is you start with a plan. You start with thinking. But that thinking is flexible to change because the end goal is still the same. The path should be flexible and your ability to think through a flexible path understanding that things are going to change whether it's on a daily basis, on a weekly basis, on a monthly basis and being comfortable with that not coming to a complete brain freeze because we're planning to ship and somehow this port today is not functioning or that supplier has gone you know shut down because of a labor strike or there's a poor congestion. So understanding that, understanding how to be creative in terms of solutions, creative in terms of even writing the contracts with suppliers. How do you think about that creativity ahead of time? Again, it does not start when the problem takes place. It starts way before then. Working with a supplier, knowing that there will be some disruption. How do you work with that supplier in a way that, you know, we're building the relationship, but we're also being creative with how we deal with them, whether it's a contractual agreement or elsewhere. And it takes different skills now.

Omar: Of course, you need to be understanding the data, right? But you need to be able to tell the story of what's happening. You need to think quickly on your feet. It sounds impossible, but it's not that hard. And again, as you get cross-functional teams in place, I think that becomes easier because you're getting more perspectives, more ideas, you're becoming more creative in terms of other areas that you may have not thought of. And your ability to communicate with those internal teams, external teams on an ongoing basis, beyond the technology, beyond the data. I know everybody thinks of technology is the magic fix for everything. It's great to get us to a point where we can use this data and then make quick decisions. We will still need folks who can think quickly on their feet because those complexities, again, supply chains are going to continue to be more complex as we move forward. I don't know that's a good thing or a thing. Maybe it's a good thing. I still keep my job. in reality, those supply chains are going to continue to be more complicated and that data and technology and everything helps us get to a good starting point to think and make different decisions. But we still need that talent. People can think through complicated problems and be either creative, think about different options and understand that there's always going to be disruptive in place and being comfortable with that level of chaos. If you're not comfortable being in an uncharted territory in terms of new areas, new decisions, new patterns, supply chains are not a good space for you to work in because in reality, that's going to be an ongoing issue for folks and it's going to require more people to think about. Proactively, that's where the creativity comes in, Ellen, is not thinking about what has happened in the past, but what do we think could be some of those changes and types of disruptions, not the events, but the nature of the disruption that might take place, so we can start building and preparing for those kinds of events when they take place.

Wood: Another topic that comes up very frequently, almost daily, is the topic of artificial intelligence, AI, within the supply chain. And we're talking about finding creative solutions. AI is very data-driven. And yes, it can comb lots of data and find other instances of situations. You can gather all types of information with AI. But the creativity that you're suggesting requires human thought.

Omar: As we know AI as of today, again, it's a great tool, excellent tool, I use it daily. We give access to our students to use it and we encourage all students to use it to their best benefit. Not to answer exams, but to use it to analyze data. But that's not gonna get you, and even we tell, in my class, we tell the students, we encourage you to use AI, but AI is not gonna give you the answer I'm looking for or that's required by the prompt. So it's going to help you, again, get up to speed faster. And that allows you more time to think critically about the issue. So you're not spending a lot of time trying to sort and sift through the data. That could help you get to that point. But once you're at that point, how do you think critically about all of those different factors? How do you become creative now about all of those issues?

Wood: Mm-hmm.

Omar: This is where I think AI and other technologies can help is provide us with ⁓ a faster starting point with more data, more information, which allows us now to think more critically and devise more creative options based on what's going on.

Wood: You know, I was thinking about this oddly this morning on my commute when I was behind a school bus and thinking about our discussion today and everything else that I have to do today. And I thought, we are living in a time where there is so much information, so much education available to so many people. We're living in such an enlightened time where you can learn anything and get answers at literally your fingertips on our phones. And yet we are still struggling with a lot of big, big problems. And I wondered how much of it is because of our reliance on the internet and digital tools and apps and all these other things that we're getting away from the idea of learning how to think critically to your point to really look at something, understand what it is and understanding what it is that we need to be thinking about in order to solve the problem. So that's very interesting. What types of things do you do with your students? I know we've talked mainly about supply chain today and about what's led to the problems that we're dealing with. What are we doing with the students to help build them into these creative thinkers, these visionary leaders of tomorrow? And what can we expect to see from some of the students that will be taking over for some of these roles? I know there's a huge gap in the supply chain labor right now, where we just don't have enough people to do all the things. It's very, very, it's difficult because it's a very selective field and we need very, very intelligent people in these roles. But at the same time, there are so many roles. There are so many roles to fill. There are so many shoes. There are so many vacancies out there. So how are we developing those next leaders?

Omar: I think multiple areas specifically within the supply chain management. But I'll step back and I'll say, again, you need to be an informed diplomat, negotiator, and a creative thinker, and think on your own, right? How do you get to that point? I think there are multiple layers. But at the end of the day, this is where I would want somebody to be coming out from our programs.

Wood: Hmm. Sure.

Omar: Or leading a supply chain, whether it's a small team or eventually being the top of a Fortune 100 company, it's the same thing. It's understanding how do you communicate effectively, right? Because you can have the best ideas, but you're not able to communicate with your suppliers, with your teams internally. And we said the importance of cross-functional work, right? It's absolutely important. Again, we can no longer rely on somebody just sitting down, coming up with an excellent model to run our transportation network or inventory systems, and that's a solution to our supply chain. There's so much communication back and forth within across organizations on every single decision, and you need to be a very effective communicator. So the ability to communicate and think through your ideas. You need to, of course, get the basic understanding of supply chain operations, the history of supply chains, how we've evolved and what's going on. That's a basic tool. You need to be comfortable with data, understanding data, but also reading and telling the story of the data. So you don't have to be the best programmer in the world. But as you start coming across data, different data sets, what is the story that's emerging and what does that story mean for us, for the company, for the trends and what do we think is moving forward? Being able to understand sustainability elements because again, whether it's sustainability reporting, ethical decision making in your supply chains, which are global, which are complicated, looking at reducing carbon footprint, looking at circular economies, circular manufacturing, closed loop supply chains. All of those different elements are no longer can be seen in a silo—that is an integral part of the supply chain. And it has a direct link to your bottom top line and bottom line. So that's part of the thinking. Again, you don't have to be the sustainability expert, but understanding of those concepts and connecting with somebody who's an expert in that domain as well. And thinking of risk, whether again, I'll talk about risk in general, but risk, whether it's cyber risk, operational risks, supplier risk, disruptions, thinking of risk in a proactive manner and thinking of, and the last thing I'll say, and I know I've mentioned a list of things, but as we give students complicated assignments or case studies or case write-ups or even take home final case analysis, thinking of we've gone through many events and disruptive issues, but how do you go into the next one with a different mindset of not just trying to get through the issue, but how do you lead through that issue because you're prepared, you're comfortable, and you've seen some of those events and you can take action in that.

Omar: You’re saying, okay, this is where we are today. If you have to think two years from now, three years from now, four years from now, what should your supply chain look like? And what are some of all of those variables that have to take into place? Because once you get to that point, you can no longer afford to be reactive. that's, if anything, that's a competitive advantage. That's an opportunity to pivot faster than your competition. So it all falls into place at some point. And again, historically, the struggle we've had to your earlier comment is we've been siloed, we've been reactive, and we've been working based on assumptions of the past, and those no longer exist.

Wood: So you have, you've alluded to it a couple of times. You wanted to get into the cybersecurity and a little bit more into that risk. ⁓ What else would you like to share about what you see as coming toward us in the near future when it comes to those particular risks to the supply chain?

Omar: I think with cyber risks, just similar to some of the sustainability risks, and I think there's a common pattern is we do a few layers. We don't have enough visibility and the ability to track and trace through second tier and third tier suppliers. So at some point we don't know what's really happening, where it's happening. We can find out after the fact and we can go through an audit and figure out this information, but we don't have that information in a timely manner. And it hinders our ability to respond in a timely manner. And one of the worst things in a cyberattack is the longer it takes you to understand what's happening and respond to it, the more the costs are, the damages are. So it's not about just speed for the sake of speed, but it's speed for the sake of being able to reduce costs and respond quickly. Maybe in some cases I can't stop a cyberattack, but I can respond to it in a more proactive and stop it quickly. Sustainability practices, again, if we look at whether it's for reporting purposes, whether it's for requirements such as the Due Diligence Act in Europe, the Forced Labor Prevention Act here in the States, how do you manage that without having enough visibility throughout your supply chain? First year, second year, and third year suppliers. And some companies now are going to fifth and sixth year suppliers just to manage those aspects. It's your visibility and ability to track and trace in a timely manner that can help you manage through some of those risks, but it also helps you reduce cost. We've seen that with some of the projects that Walmart has implemented to manage recalls for food items. I can't stop a foodborne illness, but I can change the way I respond and react to it. And it's that visibility and ability to track and trace in a very compressed time that helps us pivot quickly and respond to those kinds of events.

Wood: Absolutely. So supply chains aren't just systems, they are the result of a century of choices. As we navigate disruption today, the path forward requires both a sharper strategic lens and a broader interdisciplinary mindset. Gosh, that's a big word. We've said it a lot today. A huge thank you, Dr. Omar, for joining us and sharing your insights.

For our listeners, if you have found today's episode valuable, be sure to follow Speaking of Supply Chain wherever you get your podcasts and share it with someone who's shaping the future of operations. Until next time, stay resilient and stay curious.

Omar: Thank you, Ellen.