Interview with Yossi Sheffi, new book The Magic Conveyor Belt: Supply Chain, AI, and the Future of Work

In this interconnected world, supply chains have long crossed borders and formed a complex network covering the globe. But in recent years, geopolitical developments, changes in trade policies, and growing concerns about environmental and social responsibility are driving companies to rethink their global supply chain strategies. Professor Xie Fei, with his unique insight, analyzes this complex situation for us.

"Globalization has brought unprecedented opportunities, but it also brings risks," Professor Xie Fei said straight to the point, "The question now is how to improve the resilience and sustainability of supply chains while enjoying the dividends of globalization."

Let's first look at the advantages of globalization. Professor Xie Fei reminds us not to forget the positive impact of globalization: "In just a few decades, China has rescued 800 million people from extreme poverty and promoted them to the middle class. This is an unprecedented humanitarian achievement."

Globalization allows companies to use comparative advantages to find the best resources and production sites around the world. Professor Xie Fei explained: "It's not just about cost. China now has the best infrastructure in the world, well-trained engineers, and a complete supply chain ecosystem. This is why many companies choose to stay in China even if labor costs rise."

However, globalization also brings challenges. Professor Sheffi noted: "When your supply chain is spread across the globe, you are more vulnerable to geopolitical risks, natural disasters and other unforeseen events."

The COVID-19 pandemic is undoubtedly a turning point. "The pandemic exposed the fragility of global supply chains," Professor Sheffi said. "Suddenly, companies realized that they were much more dependent on certain key suppliers than they thought. 

This realization has driven the trend of nearshoring and relocalization. But Professor Xie Fei is cautious about this: "It's easier said than done. Companies have spent decades and billions of dollars to build a complete supply chain ecosystem in China. You can't just move it all away easily."

He gave an example: "Some companies did move the final assembly to Vietnam, but 99% of the value still comes from China. This is more to meet certain political requirements rather than a real supply chain value transfer."

Professor Xie Fei also pointed out some practical challenges facing re-localization: "For example, in the United States, we have more rare earth deposits than China, but we don't mine because of environmental issues. This is where we need to weigh - national security, environmental protection, economic benefits, how do we find a balance between these goals?"

Regarding the impact of trade policy on the supply chain, Professor Xie Fei made an interesting point: "Politicians like to say we want to punish China, but in fact, tariffs are ultimately paid by domestic consumers. Every tariff may trigger countermeasures from the other side, ultimately leading to reduced trade and making everyone worse off."

So, in the face of these challenges, how should companies respond? Professor Xie Fei gave some suggestions:

Diversification strategy: "Don't put all your eggs in one basket. Look for multiple sources of supply, especially for key components."

Improve visibility: "Try to understand your deep supply chain. Although complete transparency is difficult to achieve, at least know who your key suppliers' suppliers are."

Flexibility: "Establish a supply chain system that can respond quickly to changes. This may mean sacrificing some efficiency in some cases in exchange for greater flexibility."

Localization and globalization: "Consider adopting a 'multi-region' strategy and establishing a relatively complete supply chain in different regions, which can not only enjoy the benefits of globalization but also reduce risks."

Focus on sustainability: "More and more consumers and investors are paying attention to the environmental and social responsibilities of companies. Incorporating sustainability into supply chain strategies is not only the right thing to do, but also a wise move in the long run."

Professor Xie Fei particularly emphasized the importance of system thinking: "We can't just focus on one aspect. National security, environmental protection, economic development, these are all factors we need to consider at the same time. Unfortunately, whether in politics or the media, there are too few people who can really think systematically."

Finally, Professor Xie Fei concluded with a vivid metaphor: "Managing a global supply chain is like riding a bicycle. You need to constantly adjust your balance and adapt to the ever-changing terrain. If you stop, you will fall, but as long as you keep moving forward, you can find balance in a complex environment."

In this era of uncertainty, the balance between globalization and localization is undoubtedly a major challenge facing every supply chain manager. But as Professor Xie Fei said, challenges also contain opportunities. Those companies that can respond flexibly and balance efficiency and resilience will stand out in future competition.

"The future is already here, it's just not evenly distributed." This sentence is particularly apt in the field of supply chain management. With the rapid development of artificial intelligence (AI) and automation technology, the work of supply chain management is undergoing earth-shaking changes. Professor Xie Fei painted a picture of the future for us that is full of opportunities and challenges. "

First, we must understand that AI is not here to replace humans, but to enhance human capabilities," Professor Sheffi said straight to the point, "The most successful supply chain managers in the future will be those who can effectively use AI while leveraging the unique advantages of humans."

Professor Sheffi emphasized that future supply chain management will be an era of human-machine collaboration: "Machines are good at processing large amounts of data and repetitive tasks, while humans are good at handling situations that require empathy, creativity, and judgment. The key is to find the best combination."

He gave an example: "Imagine an Amazon warehouse. Pickers stand in place and shelves automatically come to them. This is a great example of human-machine collaboration. Machines handle heavy physical labor, while humans are responsible for tasks that require flexibility and judgment." Professor Sheffi predicted that more such work modes will appear in the future: "We may see more 'human-in-the-loop' systems, where AI handles most of the work, but humans are required to intervene at key decision points."

Facing such a future, what capabilities do supply chain managers need? Professor Sheffi gave the following suggestions:

Technical literacy: "You don't need to be a programmer, but you need to understand the basic principles, capabilities, and limitations of AI."

System thinking: "The supply chain is a complex system, and you need to be able to see the big picture and understand how the parts interact."

Adaptability and learning: "The pace of technological change will only get faster, and lifelong learning will become a necessity."

Communication and collaboration skills: "As work becomes more cross-functional and cross-cultural, these 'soft skills' will become increasingly important."

Creative problem solving: "AI can provide data and analysis, but humans are still needed to apply these insights creatively."

Ethical judgment: "As AI plays an increasingly important role in decision-making, it will become an important responsibility of managers to ensure that these decisions are ethical and in line with corporate values."

Professor Xie Fei believes that in order to cultivate such talents, the education and training system also needs to change accordingly: "Our education program has changed," he said. "In the past, we focused a lot on analytical skills, but we found that graduates often lost to those with stronger soft skills in the workplace. So now we focus more on cultivating communication, teamwork and other abilities."

Professor Xie Fei also mentioned the concept of "dual education": "Germany has a good model where students spend half of their time working in a company and half of their time studying at university. This This model allows students to better combine theoretical knowledge with practice. "

For working people, Professor Sheffi stressed the importance of continuous learning: "Companies need to invest in upgrading the skills of their employees. But the greater challenge is for independent workers and small businesses, who may not have the resources for training. This may require government support. "Professor Sheffi admitted that this transition is not without challenges: "It is understandable that people are anxious about their jobs being replaced by AI. But history tells us that technological progress ultimately creates more jobs than it eliminates. "

He gave an example: "Who would have thought that there would be jobs like 'Google Ads Optimizer' decades ago? New technologies always bring new job opportunities. "

But Professor Sheffi also warned that this transition may exacerbate inequality: "Those who can adapt to new technologies may get more opportunities, while those who cannot adapt may be left behind. This is a challenge we need to face together as a society. "

Looking to the future, Professor Sheffi is full of hope: "Supply chain management in the AI era will be more efficient, smarter and more sustainable. But most importantly, it will provide exciting career opportunities for those who are willing to embrace change and keep learning. He ended our conversation with a vivid metaphor: “Managing a supply chain is like sailing a large ship. AI and automation are our new navigation systems and engines, but we still need experienced captains to steer the ship. The future belongs to those who can skillfully use these new tools while retaining uniquely human insight.”

The content of this article is reproduced from: WeChat Official Account - DSC Digital Supply Chain. The article only represents the author's views. If you have any suggestions or questions, please contact me.

DSC (Digital Supply Chain) is positioned to bring together the country's top digitalization & supply chain experts to jointly discuss professional issues and cutting-edge hotspots in the field of large supply chains, and explore the development direction of supply chains in the field of digitalization.