Supply Chain Management – Greater EVA Potential than Any Other Function

Interview with Theodore P. (Ted) Stank, Global Supply Chain Institute at the University of Tennessee 

With the onset of the global pandemic, academic institutions have quickly responded to the hugely increased demand for both training in and research into supply chain management. One institution determined to provide real value to the industry in this regard is the University of Tennessee. Ted Stank of the Global Supply Chain Institute tells us more.  

Good day, Mr Stank. Thank you for lending us some of your time. You’ve had a long career, starting with your time in the United States Navy through nearly three decades in marketing, logistics, and supply chain roles at American universities. What was the path like to your current position at the University of Tennessee?  

I started out as an operations officer in the United States Navy, serving on a guided missile frigate (a kind of small destroyer), first as an engineering officer responsible for all the auxiliary equipment on the ship: electrical system, fresh water, high- and low-pressure air – basically everything mechanical and electrical, except for the main propulsion system. Later, I was a fire control and ordnance officer, responsible for all the weapons systems on the ship.

In one deployment to the Persian Gulf in 1985, when Iran and Iraq were at war, my ship was responsible for the safe transit of US-flagged oil tankers in and out of the Gulf. Both combatants were blowing up tankers to try to prevent the cash flow to the other. Then our missile launcher went down. My team found the part that was broken and where it was in the Navy supply system, only to discover that it had a hold on it, and we could not get it for weeks (or months). Ultimately, unable to fulfil our mission without it, we had to appeal to a higher authority to get it released. It was then that I realised that unless you had the “stuff” you needed from the supply chain, you would not be successful in fulfilling your mission. 

After I left the Navy, I went to work for Abbott Laboratories Diagnostic Division (or ADD), selling hospital diagnostic equipment and chemical reagents used for blood testing. Abbott revolutionised the diagnostic testing industry in the early 1980s by introducing an analyser that automated testing for several therapeutic drugs. Previously, that had been executed through labour-intensive processes. As a result, ADD had a considerable market share ownership. However, when I went to work for the company, others like Dupont, Kodak, and Baxter Travenol had entered the business and cut into market share. While I was with ADD, the company developed a new business strategy called ADD-ed Value, which focused on both the product and the delivery service we could offer, including 24-hour delivery of reagents (chemicals). This way, lab managers would not have to keep tabs as closely on their inventory and could reduce inventory levels, knowing that they could be replenished in a day or less if supplies ran low. This notion of service as a competitive advantage stuck with me when I left Abbott and enrolled in the doctoral programme at the University of Georgia.  

At UGA, I met a young faculty member named Dr Patricia Daugherty, whose expertise was in logistics strategy. She helped me formalise my focus on using logistics service as a competitive tool. The rest is history. I spent my early career working with companies to explore how to utilise logistics capabilities to improve delivery service and engender a competitive advantage. 

When I got to Michigan State University and later to the University of Tennessee, the industry was moving toward integrated systems thinking among planning, sourcing, making, and delivering operations to form an integrated end-to-end supply chain. Tom Mentzer recruited me to UT to help evolve the logistics programme and convert it into an integrated supply chain programme. Over the last 20 years, I’ve worked with the excellent faculty we’ve recruited to UT and top companies that partner with us to explore best practices in the broader supply chain, and how, if managed correctly, it can impact revenue increases through improved service, profit through reduced costs, and asset turnover through improved inventory management.  

We’ve seen an increased interest in supply chain and logistics courses in the US with the increased exposure the industry received throughout the pandemic. Have you observed a shift in interest or knowledge about supply chain management in your classrooms at UT?  

There has been a tremendous increase in recognition of the importance of supply chains among the public over the last three years. Mainly, they’ve been a source of pain for consumers when they break down. The number of interviews I do with media outlets has increased tenfold. And when I tell people what I do, they at least recognise the phrase. I do think that has created greater interest among students. 

But frankly, our growth as a programme at UT started more than a decade ago. When I first came to UT, logistics was the fourth-largest major in the business college. Today, supply chain management – what our logistics major evolved into – is the largest major at the university and across all higher education institutions in Tennessee. That is due to the number of partners who recruit our students into great careers.  

Not too long ago, we ran a survey with first-year undergrads. Their impression of supply chain management was that it prepared them to be truck drivers (not to denigrate truck drivers – they are essential to our economy and quality of life). But now I think students and their parents have a broader understanding of supply chain management and why it is increasingly important to private and public enterprises and society in general.   

While the university can trace its expertise in supply chain back to the 1930s, it was in 2011 that UT officially created its Executive MBA in Global Supply Chain (EMBA-GSC), with a curriculum adapted to the changing needs of the industry. How has the programme continued to evolve to cater to modern-day demands as the pandemic wanes? 

While the bedrock concepts of best practices in supply chain management have not changed considerably since the EMBA programme launched, there have been several emerging trends that we have had to work into the curriculum to keep up with changing times.   

These include: 

• Increasing applications of digitalisation and automation across supply chain activities; 
• Growing geopolitical and natural disruptions that cause supply chains to become more regional, as opposed to pan-global; 
• New skill sets that make talent development critical to success in the digital and cross-cultural world; 
• A critical shortage of talent, making recruitment a more strategic undertaking;  
• Considerations around when and where to automate; 
• A heightened focus on social and environmental issues, such as diversity, inclusion, and sustainability

Universities emphasise producing academic research. But, through the Global Supply Chain Institute, you and other faculty members have developed close relationships with the industry. Do you see academic research translating into industry practice? And how do participants utilise research methodologies and tools from their graduate studies in their professional lives?  

This is a hot button for me. If structured correctly by business faculty who understand the needs and are comfortable working with industry partners, research should be theoretically and methodologically rigorous. It should also be relevant to industry to help overcome challenges and improve performance. It is a cop-out for business academia to adhere to norms that suggest this is not the case. On the whole, a business school should produce knowledge generated from research that furthers both theory and practice. I completely refute those who believe the two are mutually exclusive.   

Our Advanced Supply Chain Collaborative is an exemplar of the potential of this belief. Each year, up to 20 faculty and PhD students engage 10-12 of our partners in collaborative research projects that yield results adapted and applied by those partners and published in various outlets by our faculty. These research projects inform cutting-edge curricula in our classrooms, including the EMBA in Global Supply Chain.  

There’s also been a spotlight on the importance of developing soft skills in executive education. Several US universities, influenced by the pandemic, have pivoted their curriculums to concentrate more on things like risk management, data management, and production reshoring. Has the university taken a similar approach? 

Well, yes. But I don’t consider those soft skills. They’re core supply chain knowledge and practice areas taught in our supply chain programmes for years.    

Our focus in the EMBA is to hone those skills and provide our students with the strategic and financial skills to communicate the benefits of world-class supply chain management to the C-suite and, further, to take their seats in the C-suite to direct the business into a future dependent upon best-in-class supply chain management for its success.  

Supply chain management is at an inflection point. It’s becoming harder for organisations to find people with the right skills to match. What kind of insights into logistics and distribution does the programme give students, and how can graduates use these in the workforce?  

First, a word of caution: supply chain management is not logistics and distribution. Logistics and distribution are vital parts of the supply chain, but there is much more to the discipline. 

Supply chain management spans boundaries. It facilitates an organisation’s ability to plan for and secure the resources needed to create and deliver everything from jellybeans to skyscrapers. This stretches from growing food, digging minerals out of the ground, or creating molecules in a lab, to delivering finished goods to consumers anywhere in the world. And it’s equally important to get packaging material and used products back into the value stream.   

Supply chains represent three of the four ways that organisations create economic value. These four value-adds include:   

• Determining customer wants or needs and what they are willing to exchange to get them filled (this is the responsibility of marketing and sales); 
• Creating the right product or service to fill the want or need;  
• Getting the product or service to the customer at the right time;  
• Bringing it to the place where they want to consume it.  

The last three are all the responsibility of supply chain management to plan, source, make, and deliver on the promise of the exchange. 

Our programme provides students with broad knowledge of how to manage, plan, source, make, and deliver operations as an integrated system and gives them the senior leadership skills in strategy and financial management to use their knowledge to guide the firm toward a successful future. 

How do you think that supply chain professionals are uniquely poised to see the future? And what do they see that other disciplines may not? 

First, most of the cost, human resources, and working capital in any operating firm lie within the purview of supply chain managers. 

Second, no other functional area in the firm is educated or structured to view firm operations as an integrated whole, seeking to optimise system performance rather than isolated functional performance. 

Third, no other functional area works both downstream, with customers and customer networks, and upstream, with service and goods suppliers, extending the system perspective to include the entire value chain.  

Finally, supply chain management, if done well, has a greater opportunity to significantly impact economic value added (EVA) than any other function, due to its impact on revenue, cost and margin, and assets. 

What is your high-level view of the supply chain field today – particularly from the perspective of executive education – and how do you see it evolving over the next five years? 

Executives with supply chain management expertise are increasingly finding their way into the C-suite. Firms recognise that, in the emerging world order, managing regional supply chains, dealing with massive instability in demand and supply, addressing talent shortages – and the skills possessed by supply chain managers equipped with best-in-class knowledge – are the key to their success. 

Much as finance and marketing expertise were the keys to senior-level leadership over several decades, supply chain management will be the key to C-suite leadership in the next 10-30 years.  

What advice would you give someone considering applying to the University of Tennessee’s EMBA-GSC programme?  

Our programme is designed for managers with 10-15 years of experience who want to broaden their knowledge base of end-to-end supply chain management and hone their skills in senior leadership traits like strategy, leadership, and finance.  

We have other educational offerings at UT that provide greater depth in supply chain areas; the EMBA is for people looking to move into positions of greater overall business responsibility. 

Now, if this description fits you, I’ll say this. Get ready for a year of tremendous growth and a new network of friends and partners. It won’t be easy, but join us if you want a transformational experience. After graduating 10 classes and over 150 executives who can attest to that statement, I can guarantee it. 

And finally, as someone who’s achieved notable distinctions in university education and supply chain leadership, what would you describe as success? 

Everyone must assign success for themselves. My mission is to positively impact other scholars, students, and organisations through my scholarship while maintaining a healthy work/life balance. I seek to implement this by creating effective teams and empowering others to achieve their full potential. 

Throughout my career, I have focused on doing work that makes a difference. As a result, I have never been overly influenced by goals like publishing another article or winning a teaching award (although that recognition is both satisfying and validating). My greatest satisfaction has come from seeing the knowledge I’ve generated and conveyed to others put to work to deliver results. This ultimate measure of impact has come in four forms:   

• Conducting scholarly research regarding the use of supply chain management to create organisational value;  
• Using the knowledge generated from my scholarship to work directly with organisations to make changes that yield value creation;  
• Disseminating knowledge generated through scholarship to students (at all levels), thus helping them create value for their organisations as well as themselves; 
• Facilitating the success of my academic colleagues and PhD students. 

Executive Profile

Theodore P. (Ted) Stank is a professor of supply chain management and co-faculty director of the Global Supply Chain Institute at the University of Tennessee, Knoxville. He leads the Advanced Supply Chain Collaborative, a joint initiative between UT and leading Fortune 500 partner firms focused on better understanding innovative applications in SCM.