Talking Logistics and Supply Chain with Martin Christopher

Patrick Daly:

Hello, this is Patrick Daly, and welcome to Interlinks. Interlinks is a program about connections, international business supply chains, and globalization. And the effects these have had on our life, our work, and our travel over recent times. Today, on the show, we will be talking to Martin Christopher, professor emeritus at Cranfield University in the UK, where he’s been instrumental in building the Centre for Logistics and Supply Chain Management. And after leading the Centre for over 20 years, Martin now dedicates himself to a wider portfolio of activities, including the creation and dissemination of knowledge in the field through published works, executive development, speaking, and thought leadership. And among his books are included the titles, Marketing Logistics, and Logistics and Supply Chain Management, as well as several others on dealing with procurement strategy, business relationships, operations and humanitarian logistics. So welcome, Martin, great to have you here with us today.

Martin Christopher:

Thank you, Patrick. Good to be with you.

Patrick Daly:

So logistics and supply chain are areas of knowledge that were, I think, Martin, until relatively recently, the preserve of practitioners and academics in the field. But, now, it seems to be on the lips of politicians, TV presenters, economists, wherever you turn on the radio, the TV, online. People, more and more, are realizing that their current and future wellbeing are very much tied up with the correct functioning of these mysterious supply chains. So maybe, before we delve into what’s going on in supply chains now and what might happen in the future, we might perhaps just take a quick look back at how we got here. And your role, and Cranfield’s role, in all of that. When and how did the world become so dependent on international supply chains? And what was your role, and that of Cranfield University, in the story of the theory and practice in logistics and supply chain over the last three decades or so?

Martin Christopher:

Well, I guess the first question about when did we really start to take supply chains seriously, we’ve always had supply chains, of course. But I think, as you rightly point out, it’s only in the recent past that, because of a whole number of events of which we’re very familiar with, we’ve come to recognize the dependencies that underpin economies across the globe. And I think one of the main drivers for this, and we could maybe trace it back to probably… I don’t know, around about the ’70s, ’80s of the last century, 1970s, 1980s, with the major move to, first of all, outsourcing. But then, also, to offshoring. And if you remember, there was a great surge in the search for what they then called low cost country sourcing.

I don’t think there was a lot of concern with looking at things like supply chain risk at the time. It was really about, how do we squeeze cost out of the business. We take companies like say, here in the UK, Marks & Spencer. At the time, then, one of Britain’s leading clothing retailers, less so today. But they made a major shift, around about that period, from being almost entirely UK and Republic of Ireland based, in terms of their sourcing, almost every one of their clothing products came from the British Isles. And they moved, in a space of less than a decade, to being massively sourced from offshore. And that was just one little example, there are many, many, many others like it.

And I think, since then, that trend continued, obviously. But also, too, I think, we started to recognize that the more we adopted things like just in time and so forth, what we were actually doing was we were extending lead times in many cases. And it was actually making our supply chains less responsive to… As demand became more volatile and economies became more turbulent, we started to realize that, well, maybe, actually, these supply chains need to be better managed. And, particularly, that we need to start to get a better grip of what we now call supply chain visibility. So I think we stumbled into a lot of these things, without paying proper regard for what the real implications are. And now, of course, we’re all starting to recognize this. And I think this is the reason why it’s really risen to the top of the agenda now in boardrooms in every industry. And, as you say, politicians, particularly, are much more aware of this than ever they were.

You asked me, how did Cranfield come to be involved in this? Well, it’s actually almost an anniversary. I’ve just passed the 50th anniversary since I joined Cranfield, as a fairly junior lecturer in logistics and supply chain management. And in those days, we didn’t even call it supply chain management. It was called physical distribution management. And it was very much about what today we’d call trucks and sheds. It was transportation, it was warehousing. All very important issues. But we started to recognize, as did many others, of course, that, actually, the way we serve the customer can be a very powerful source of competitive advantage. And I think that’s where we really started to focus our efforts at Cranfield.

And so I became professor of marketing and logistics, which is quite an interesting combination. It was really about saying, “How can we harness logistics to create advantage and to improve our marketing effectiveness through the way we serve the customer?” And we started running programs. We launched an MSc in what is now logistics and supply chain management. Many executive programs, of course, over those years. And, indeed, our research activity, which underpinned all of this. I’m pretty proud to say we were doing some fairly significant work around about the year 2000 in supply chain risk. And this was at a time when nobody was talking about risk and resilience. This was actually brought on by one of the… You may not remember this, Patrick, maybe you’re too young. But in the year 2000, we had this Y2K scare.

Patrick Daly:

Yes, I remember. I do remember, yeah.

Martin Christopher:

As we moved from one millennium to the next-

Patrick Daly:

The planes were going to fall out of the sky.

Martin Christopher:

That’s right. All the computers were going to come to an end, to a halt. So there was actually quite a lot of concern about how vulnerable our systems were. And I think this started this whole focus. And that’s when we got involved, certainly, in working in that area.

Patrick Daly:

And it’s interesting you mentioned marketing and logistics, because I came to the world of logistics and supply chain from the engineering side. So I started my career as an engineer in manufacturing, and that’s how I encountered it. But, for me, it was all about materials, and imports, and exports, and warehouses, and trucks, and you said. And when I first came across your work, it was through your book, Marketing Logistics, and I was very surprised to see those two words standing together. So what is the link between marketing and logistics? And what is the key message that you want to convey with this idea of marketing logistics?

Martin Christopher:

Yeah. Well, I think one of the major drivers behind this focus on these twin areas of marketing and logistics was the fact that, increasingly, in many markets, we were moving towards a commodity type status. Where, the classic marketing tools of advertising and promotion and so forth, were having less and less effect. When brand loyalty starts to slide, and people are motivated much more by availability. Just think about our regular visits to a supermarket. We may have a preferred brand of instant coffee or whatever it may be. But if it’s not there, we’re probably not going to go searching halfway around town to find it. We’ll take an alternative. Maybe one we’ve used before, which we quite like. And what it’s really telling me, increasingly, and it’s not just in grocery retailing, it’s everywhere, is that availability, increasingly, can overcome brand loyalty. And, certainly, I think if we’re looking at B2B marketing-

Patrick Daly:

If you’re not with the one you love, love the one you’re with, kind of thing, yeah?

Martin Christopher:

Yeah, exactly, yeah. And I think it’s that realization that says, well, actually, in that case, what we need to be focusing on is the systems that enable us to ensure that product is available at the time and place that the customer wants it. I like to use the example, I think that Procter & Gamble originally introduced, and this was this notion… They talked about the two moments of truth. One of those moments of truth is the customer experience when they try the brand, do they actually like it? Do they want more of it? They want to come back for it. But you don’t get to that moment of truth if you don’t meet the first moment of truth. Which is, when the customer’s looking at the shelf, is your product actually there? And it’s that twin focus that P&G have really emphasized, I think probably for the last 20, 25 years now. And it’s led to, I think, in that business, and many others like it, a real recognition that marketing and logistics have got to be managed side by side.

Patrick Daly:

Another idea, I think, that people identify with you is the one that, supply chains compete, not companies. So what do you mean by that? And what are the implications of that idea? And how does it actually manifest itself in practical reality?

Martin Christopher:

Yeah. Well, I think there was a time, as you know, Patrick, when many companies did pretty much everything themselves in-house. If we think about a company like Unilever. When I first started as an academic, it was a long, long time ago, but Unilever, they had their own advertising agency. They had their own transportation company. They had a shipping line, the Norfolkline. They had a market research company. They had fish farms. You name it, they had it. If it was part of the supply chain, they’d want to own it. Well, that’s all changed, as we know. Fewer and fewer companies now want to cover the entire end-to-end process. Instead, they want to focus on what they might think of as their core competencies. And so, as a result of that outsourcing, the dependencies in every business have grown significantly. And so, when I say that supply chains compete, what I’m really saying is, it all comes down to how well do we manage those interfaces, those relationships, with those upstream and downstream partners. And that’s what makes a difference to me.

You can see, if we take an example from the car industry where, again, they’ve been through the same process of focusing just on what they’re good at. And so a company like Ford, who previously, in the days of Henry Ford the first, he owned steel mills. He owned rubber plantations. Anything he needed, pretty much, to make that car. Well, today, of course, it’s nothing like that now. They don’t own steel mills. They’ve outsourced their component manufacturing and so on. And so, they’re very much dependent now upon how closely they can work. And often, too, they’re very dependent for innovation, as so many companies are, on their supply base.

And so I think it’s really down to how good we are at managing these relationships as real partnerships. Because, as you’ll know, so many companies in the past tended to have almost adversarial relationships with their suppliers. They’d play one off against the other. There’d be arms length relationships. You wouldn’t want to get too close to them. You wouldn’t want to share information. Well, that’s all changed. And that’s really what I mean when I say supply chains compete. It’s the quality of the relationship that makes a difference.

Speaker 3:

93.9, Dublin South FM.

Patrick Daly:

This idea, then, of supply chains competing implies, as you said, collaboration between entities that are actually independent for mutual benefit. But I get the impression, then, that there must also be an unequal distribution of power and value appropriation in supply chains. That’s just unavoidable, I guess. So how can, or should, supply chain governments work to the benefit of all the participants? Or is it just more a case of rule by the strongest, and then do the best with whatever levers you have for the smaller players? Or how does that work out?

Martin Christopher:

Well, I think the smart companies, yeah, they recognize that we’re in the driving seat. And we want to, if you like, be the channel captain. But they also need to recognize that they’ve got to leave something on the table for the people they want to work alongside of. And so, when we talk about win-win, a lot of people think that means 50/50. We’re going to split the… It doesn’t mean that at all. If you’re Procter & Gamble working with Walmart, Walmart has got the power, there’s no question of that. But Walmart are also smart enough to recognize that they need to have the best relationship with Procter & Gamble, in order to take costs out of the supply chain. The only reason that Walmart can have their everyday low price value proposition is because they’re working with suppliers who are prepared to connect their systems to theirs in some seamless way, to enable those significant costs, that are embedded in the supply chain, to be kept to a minimum.

So, yeah, obviously, there’s always going to be somebody in control. But the smart companies say, “Yeah, we’re in control. But we also want to make sure that we’ve got profitable suppliers. And that we leave something on the table. Because if we don’t, that relationship’s not going to last too long.”

Patrick Daly:

There’s an enlightened self interest. And I think maybe Toyota would be a good example of that, particularly in innovation. Isn’t that right?

Martin Christopher:

Yeah, I think that’s true. I think in many ways the Japanese companies have shown the way here, in the way in which they, certainly, initially, used to establish very tight and close working relationships. They talked about a keiretsu, a circle of suppliers, with whom they invested too. I remember when Nissan opened their first factory in the UK. Nissan dealt with only a relatively few number of suppliers, which was quite revolutionary in the context of the British car industry at that time. But with those suppliers who they did deal with, they actually put a supplier development team, a team of Nissan engineers and IT specialists and particularly quality specialists, to embed them into those suppliers, to really bring those suppliers up to speed. They were prepared to invest in improving those suppliers’ processes. And they weren’t doing that as a charitable exercise, obviously. They were doing that to improve their own operation. And, of course, it paid off amazingly.

Patrick Daly:

Yeah, it’s very interesting. I’m fascinated, currently, right at the moment, about what’s going on. So we have this current environment, where we’ve been experiencing a series of shocks, that they appear to people to be unexpected. Maybe they’re not so unexpected, but they feel unexpected, such as the war, such as pandemic, trade wars, Brexit, and so on. But they’re all set within bigger trends that are clearly visible, I think, for anybody who’s paying attention. Such as demographics, social media and the effects that’s having, climate change, energy transition, sovereign debt. That’s all there, and we can see the big arc of that. So as these events and trends continue to interact and play into business strategies, where do you see that supply chains are at right now? International supply chains I’m talking about now. And how do you see them changing and evolving in the coming years?

Martin Christopher:

Well, certainly, every supply chain manager I’ve talked to in the recent, I don’t know, in the last 12 months or so, are all saying the same sort of thing, basically. That globalization isn’t over, obviously, and it’s going to continue. But I think we’re all taking a very close look now at these arrangements. And we’re starting to think about some of the ideas that we’d discarded in the past. Things like dual sourcing, for instance. I see a lot of people talking, for instance, about China Plus One. Basically, what that means is that, yeah, we want to continue to source. Because we’ve been doing that, and we’ve been building significant investment in China for a long time. But we also recognize the potential risk that that might entail as we move forward. And so we want to have something alongside that.

So if you look at, say, Apple, for instance, their latest iPhone, a significant proportion of that now is being sourced and assembled in India. And they’ve always been a massive player in China, as you know. But I think they’re recognizing, as many companies have now, that in this world of uncertainty, we’ve got to have a whole number of contingencies. And it may not be the most efficient way to run the business, but it’s the one that’s going to provide the greatest resilience. And I think, today, the key word, as we know, is indeed resilience. And so, if that means that things are going to cost more, then that’s the price of survival in this uncertain world.

Patrick Daly:

I know demographics is a topic of interest to you. And I’ve heard you talk about how that will affect people’s spending choices, and where and when they spend, and so on. And there was a very interesting article, actually this morning, in The Guardian, talking about the relative demographic trends in India and China. So India very soon is about to overtake China as the most populous country in the world. But not only that, its population is continuing to grow, as China’s is… They think maybe it’s peaked and it’s going to begin to decline. So that gap is going to open up. So I guess that will have an interesting impact on supply chains and consumption in the coming years, won’t it?

Martin Christopher:

Indeed. And I think, again, many organizations have come to recognize this. That our supply chain arrangements, and indeed our whole product strategy in the past, has been very Western centric. And now, of course, we’ve come to recognize that, as you say, the whole center of gravity has been moving. And those trends have been there for some time. And so I think the idea that we need to have much more flexibility in how we build our supply chain arrangements, our sourcing arrangements, where we manufacture and so forth.

And it’s interesting to see a company like General Electric, for instance, saying, “We’re a global business, but what that means increasingly for us is that we’re going to be much more local for local. So there won’t just be one General Electric and one General Electric supply chain strategy. There’s going to be many of them, and they’re going to be based wherever we can, much closer to our markets. If those markets are in India and wherever, then that’s where we’ll be.” And I think it’s leading to a very interesting situation now.

Whereas, in the past, we always used to talk about centralization of manufacturing, focusing factories. We’ve talked about economies of scale. Now, there’s a much greater emphasis on what we might think of as distributed manufacturing. The idea of moving supply closer to demand. Smaller scale, but making use of new technology, which means that we’re not losing any of the economies in doing this. And, indeed, what we’re gaining is what some call the economies of scope, which means we can do more things with the same resources. So we can customize, we can tailor, we can localize, whatever it may require. So it’s a different landscape, I think, that we’re starting to see now in every sector.

Patrick Daly:

So it’s a regionalization of supply chains. Lots of redundance, maybe some duplication, but more resilience.

Martin Christopher:

Yeah, indeed, yeah. So it’s the same sort of pattern that we were saying before about the sourcing arrangements. It’s about flexibility. And I think it is… If you think about it, it’s so obviously the sensible thing to do if we can, when we don’t know what tomorrow’s going to bring.

Patrick Daly:

Sure. Closer to home, then, given that you’re in the UK and I’m in the Republic of Ireland, and it’s here on this island, where the only land border between the UK and the EU now resides. So how has Brexit affected UK supply chains? And independently of the politics around it all, what do you see as the challenges and opportunities that Brexit, as polls say, both for the United Kingdom on the one hand, and then for your closest EU neighbor, Ireland, on the other?

Martin Christopher:

Well, the challenges have been massive. And I just wish that those who made those decisions at the time were more fully appraised of the supply chain implications. Sadly, and maybe we’re all to blame for not trying to shout this out a bit louder, as to what the likely implications were. And it’s really come home to roost now, I think. And so the problem of trying to resolve this, as we know, is taxing… Well, I was going to say greater minds than ours. Maybe they’re not greater minds than ours. But I’m hoping that we’re actually going to move away from this hard Brexit idea that dominated, certainly here in the UK, in political circles. And we move to something a bit more pragmatic, which recognizes that Europe, for many years, has been, and still is, our biggest trading partner. And I can’t think of any company that would want to voluntarily walk away from its biggest customer. So I think we’re going to find solutions. They may not be to everybody’s satisfaction. But it’s something which is vital, I think, on both sides. We’ve got to work this one out.

Patrick Daly:

Yeah. And so, now, at this juncture, if you like, in your career, so what are your areas of interest now? And what work are you doing in the fields of executive development, writing, thought leadership, and so on?

Martin Christopher:

Well, I’ve stepped back from my full-time teaching role now. And what I’m focusing on is trying to just develop ideas around agility, and particularly as it applies to resilience. Because, as we’ve just been discussing, this has become, I think, the key issue today. And I think will remain so for a long time to come. And working and talking to people, like yourself and others. Trying to scope out possible strategies for organizations to say, “How do we actually manage a supply chain in a world where we can no longer assume that tomorrow will be the same as today?”

And I think this means that we’re all going to be looking for a rather different supply chain landscape. Which, for me, certainly, is going to be based much more upon working more closely with others. As I say, I think we’re forced to do this, whether we want to or not. This is why I’ve been focused so much on relationship management. And, as we were highlighting before, this idea of supply chains competing, not individual businesses. So this is where I’m going to be spending most of my time is thinking and writing. I’ve just brought out… Well, it’s actually not hit the bookshops yet, but it’s with the printers. The sixth edition of my book, Logistics and Supply Chain Management, which is updated, and tries to reflect on these recent impacts that we’ve been talking about. And I’m sure, as time goes on, we’ll probably see a need again for yet a further edition. Whether I’ll produce that or somebody else, I’m not sure.

Patrick Daly:

Okay, well, I look forward to the new edition. And I’ll pick it up as soon as it comes out. So as we come into the last few minutes, Martin, we might just change tack a little away from work and business. I might just ask you, outside of work, what kind of things do you like to do in the way of hobbies or other interests?

Martin Christopher:

Well, I’ve got one or two commitments, where I’m involved with a couple of different charities. One is attached to the local art gallery, actually, where… I’ve always been a big enthusiast of art. And so I’m helping with trying to develop, let’s call it their outreach, if you like, in terms of… We’re very fortunate here, where I live in Bedford, in having a really splendid art gallery in what is a relatively small town. So that takes up some of my time. But the other one, which is, again, quite different, it’s a UK organization called CPRE, which is actually a countryside charity. Which is about trying to protect Britain’s diminishing countryside from some of the depredations of development and so forth. It’s not trying to stop us moving forward in the 21st century. But what it’s trying to say is, can we do this in a way which still leaves something for others who are going to follow us? So that’s another significant involvement that I have.

Patrick Daly:

Yeah, it’s very worthwhile. Are you reading or listening to anything lately that you find inspiring and you’d recommend to listeners?

Martin Christopher:

Well, I’ve just been reading a few things. Again, they’re countryside related. But it’s about what we call regenerative, if we can say it, farming. The idea being that conventional farming practices, and even most farmers would acknowledge this, where we’ve been very dependent upon intensive farming and particularly using synthetic fertilizers and so on, means that we’ve only got maybe, some say, another 14 harvests left. Because the quality of soil, for instance, has been so degraded. And so there’s quite a big movement now in what we call regenerative farming, which is about… It’s going back, in a way, in some respects. But it’s actually allowing nature to play a rather greater role in how things are grown. And trying to create this balance between having a countryside that still looks a little bit like the countryside, but is also capable of feeding a growing population. And so that’s a really interesting area that I’ve been looking at recently. And a book by Jake Fiennes, which he is an authority in this area, which is something which I’m just currently reading, called Regenerative Farming.

Patrick Daly:

Excellent. Sounds really interesting. Regenerative Farming by Jake Fiennes.

Martin Christopher:

Yeah.

Patrick Daly:

Yeah, I’ll look it up. Well, Martin, as always, we always get beaten by the clock on this show. And it’s happened again today. So many thanks for being here with us today. It’s been an absolute pleasure to talk to you.

Martin Christopher:

Well, thank you too, Patrick. I enjoyed it very much. Thank you.

Patrick Daly:

Likewise. And thanks, also, to our listeners for tuning in again today. And be aware that if you enjoyed this episode, you can find the full series of over 100 episodes of Interlinks on Spotify, Apple Podcasts, Acast, and other major podcast platforms. So until next time, keep well and stay safe.