You need to build your supply chain with an eye on sustainability. To me, that means: People. Planet. Profit.

There are a number of components to the people part. Are you a good employer? Are you the kind of employer that people want to work for? Because to have a great supply chain, you have to have exceptional talent to manage it. If you’re not a good employer, then you’re not going to be able to recruit and keep that talent. Then there' the attention you pay to other people. Are you attentive to your customer's needs? Do you care about your community? How are the people in your community reacting to you? Are they going to let you transport the things you need to transport to be successful in your business?

There are a lot of issues for a lot of companies that stem from transporting goods that may be perceived either correctly or incorrectly by the public as dangerous. Of course, that goes hand-in-hand with the fact that you’ve got to be doing all the right things environmentally. You have to be good stewards to the environment. As you’re laying out your supply chain network, what are you doing to minimize its carbon footprint? Minimizing that is the right thing to do. A well-laid-out supply chain network is very energy efficient.

And that brings us to the last "P" – profit. You can't be a sustainable business unless you can make a profit. Profit means that what you’re doing is important enough to your customers that they’re willing to pay to keep it going into the future.

"Skid scale" means you can literally have a manufacturing plant on a skid.

Right now, this is happening a lot with companies that provide gases for manufacturing processes. There's a French firm called Air Liquide and an American company called Air Products, both of which will deliver a processing plant on a skid right to your location. Air Products provides processing plants that produce nitrogen at the wellhead for oil and natural gas wells.

So materials that once were produced at a large, centralized plants and shipped in containers over many miles can now be produced in efficient, small scale plants right on site, avoiding transportation headaches and questions about timely deliveries.

The potential for 3-D printing in the manufacturing process is the ultimate extension of this idea.

Having small, localized plants greatly simplifies your transportation issues. Often these plants can be remotely operated or totally automated. It's a very interesting trend that hasn't yet been fully realized.

What’s happening today in American manufacturing is what happened to American farming around 1900. We’re going from where it takes a very large number of people to produce all the products we use to where we need a very, very small number of people to produce them. We're finally seeing the results of all the efficiency improvements we've put in place with automation, and there's still a long way to go.

E-business is a good example. The concept has been dealt a public relations blow by the trouble-plagued implementation of the Affordable Care Act. The government's  website was not created very successfully and you can see the kinds of problems it created.

But the trend is there. More businesses are dealing with their customers and suppliers electronically. If you want to buy a book, you go to Amazon.com. You don't drive to a bookstore. You don't call someone up at a bookstore to order a book. You go online and order one. Increasingly, that’s how we order things in our society today.

Now the question is, does your electronic system seamlessly integrate with the rest of your supply chain operation so that you can actually deliver the product in the manner in which you promised.

There is also the concept of "no-touch orders." Ideally, a company should have things set up where the only touching of an order that ever occurs is when somebody takes the final package and puts it on a truck. But maybe even that could be automated. A person would never intercede: No one would ever have to make any kind of entry. No one would have to do any kind of barcode scan. All of that would occur automatically.  

It used to be trendy to outsource. Companies are increasingly realizing that you shouldn’t outsource everything. But you ought to outsource the right things. Same thing with insourcing: You don’t want to have everything in-house, but you have the right things in-house.

I had a client recently who I think was expecting me to recommend that everything be outsourced. In fact, I recommended that the company keep doing what it was doing, insourcing almost everything. There was no advantage to be gained by outsourcing. I’m not against outsourcing and I’m not against insourcing. You use the right tool at the right time.

Now we are seeing more people choose "Made in the USA" over sending business offshore. This is a result of more careful consideration of risk management for overseas operations and supply chain links, and also the need to optimize the supply chain network. 

A lot of companies went offshore because it was a trend, not because it made good business sense. People are starting to see the side effects. And there’s the fact that other economies are beginning to mature. You could make things really cheaply in China a few years ago. But now Chinese workers want to be able to buy the things they are making and wages are going up, so there's no longer as much of an economic advantage to production in China. Eventually, we’ll run out of places where you can find people willing to work for almost nothing.

Being offshore carries significant risks: You have to consider what happens if supply is disrupted, you have to consider the true cost of transportation, and you have to consider time lags you are unable to control. There is also a significant risk of loss of proprietary information.  Companies are learning that it may actually be cheaper to make something here when you consider all the risks involved offshore.

Today, when you order something from Amazon you expect to have it in two days. That sense of immediacy has become the basic expectation.

A corollary is that people expect products to be updated frequently and they expect to have the latest version of a product. The major cell phone companies have realized that, so they've created new programs that allow their customers to turn in their phones for new ones more frequently. No one wants to wait another year to the their new iPhone because the opportunity to get it for a subsidized price doesn't come around until then.

From a business perspective, this expectation of immediacy has changed supply chain strategy. It used to be that a company would pile up inventory and use the excess product as a buffer to make sure that demand was always met. Now, no one will use inventory that way. You don't want to get stuck with a warehouse full of iPhones that have been replaced by a newer model. So Apple will  allow the supply of the older models to dry up before the new models are released.

Response time is a big issue. It’s going to move its way backward through the supply chain, and that’s one of the reasons why what I am calling the "skid scale" production model is going to become more and more viable.

Because there is a global supply chain, there are a lot of security concerns that you need to be thinking about. We just recently saw on the news about some radioactive cobalt in Mexico that got stolen. 

Absolutely there needs to be increased attention on security. This has been going on for a while. Since September 11th there have been all sorts of security issues for anything that needs to be imported.

One example is money. You don’t normally think of a supply chain for money, but there really is a very interesting supply chain moving money around between financial institutions and getting it to the right place at the right time.

The thinking that we use for supply chains is starting to extend beyond what we traditionally thought about in moving oil or raw materials around or even in moving finished goods around. A lot of the products that we’re moving towards nowadays are more virtual in nature. They still require you to have a supply chain strategy for them, and we cannot afford to overlook those kinds of supply chains.