The Journal of Business Logistics (JBL), published by the Council of Supply Chain Management Professionals (CSCMP), is recognized as one of the world's leading academic supply chain journals. But sometimes it may be hard for practitioners to see how the research presented in its pages applies to what they do on a day-to-day basis. To help bridge that gap, CSCMP's Supply Chain Quarterly challenges the authors of selected JBL articles to explain the real-world applications of their academic work.
THE ARTICLE
"Reconceptualizing Intuition in Supply Chain Management" by Craig R. Carter and Lutz Kaufmann of Arizona State University and Claudia M. Wagner of WHU—Otto Beisheim School of Management. This article received CSCMP's Bernard J. La Londe Best Paper Award for the most valuable paper published in the Journal of Business Logistics in 2018.
THE UPSHOT
As managers, it can be tempting to believe that all of our decisions are fact-based and rational. But this is not always the case, especially when we have to operate in uncertain and time-constrained environments. For example, in pressured situations like negotiations with suppliers, supply chain managers might not have the luxury of putting the process on pause and running what-if analyses. In these circumstances, managers often make decisions based on a "hunch" or "gut feel."
In spite of this reality, there is limited research on the role intuition plays in supply chain management. In fact, there is not even a clear, consistent definition of intuition. Instead, different studies define intuition in different ways, some equating it to "experience-based" decision making, some addressing the emotional aspect of intuition, while others focus on the automatic-processing dimension. In this paper, researchers from Arizona State University and WHU—Otto Beisheim School of Management develop a more comprehensive definition of intuition that unites all three of these dimensions. They write, "we tentatively define intuition as a three-dimensional information retrieval process in which the decision maker establishes 1) connections between the current and past situations, 2) positive and negative gut feelings are evoked, 3) and a decision is made rapidly, automatically, and without much awareness." This definition was based on a review of previous researchon intuition that appeared in management, supply chain management, and psychology journals as well as in-depth interviews with supply chain experts.
The researchers used that definition to create a measurement tool for intuition that could be applied to the supplier selection process (and possibly adaptedto other supply chain management contexts as well). The measurement tool consists of a 12-question survey that measures theamount and kind of intuition used in a decision. Survey takers are asked to rate how strongly they agree with statements such as, "I made a connection between the situation at hand and similar situations in the past and decided accordingly," and "Several suppliers fulfilled the needed requirements, so I based my final decision on my gut feeling."
The article's corresponding author, Craig Carter explained to Supply Chain Quarterly Executive Editor Susan K. Lacefield what he and the rest of the research team discovered about intuition and how companies can apply their findings.
Q: What was the impetus for this research?
So, there were two broad reasons why we were interested in looking at intuition: one professional and one personal. On the professional level, my coauthor Lutz Kaufmann and I have been delving into behavioral supply chain management since 2007. Behavioral supply chain management basically involves studying the human decision making done by supply chain managers that is subject to potential heuristics (or practical methods that are not guaranteed to be optimal). There is a preponderance of research based on the idea that in economic situations, decision makers will act rationally. However, we know that this is not how decision makers actually work in the real world. This article is the latest in a series looking at supply chain decision making in the real world, which started with a paper about biases in making logistics decisions and ways to overcome them.
More specifically on a personal level, one day I decided to go backcountry skiing at one of my favorite places in the Sierra Mountains in California. I had checked the avalanche safety warnings beforehand, and they indicated that everything was okay. These warnings are based on a number of factors such as wind, amount of snow, and temperature changes. But as I was climbing up with my skis along what was my normal, standard route, I got a queasy feeling in my stomach. Now I have 40 years of experience climbing and skiing in the backcountry, and that day I decided to abandon my original plan and not go skiing there. Instead I went to the other side of the valley, to an inbounds ski resort. As I was riding up the ski lift, I looked over at the spot where I had originally intended to ski and saw that there had been a massive avalanche that would really have not been survivable. In that case, intuition definitely worked for me.
Lutz had also had similar kinds of experiences, and this motivated us to look at intuition as part of our ongoing study of behavioral supply chain management. Is intuition real, or is it just a false perception that we think existed when looking back? And if it is real, how can it be used effectively?
Q: How big a role does intuition play in supply chain decision making today?
I think it depends on the timing, whether it's a fast-thinking decision or a slow-thinking decision. Intuition is going to play a much more important role in adecision that needs to be made in the next few seconds during a negotiation. It's also important to realize that it may not be an "either/or" scenario. Key decisions are often not made either based on intuition or based on a rational, fact-based response, but instead using a combination of the two.
Q: Do you feel managers have a good sense of how much they use intuition when making decisions?
I think it plays a bigger role than most managers admit. If you take the example of a site-location decision, people often quip, "Well how many golf courses are in the area?" But there is some truth in that statement. Those types of soft factors often do come into play in making these decisions. I recently read an article about a company that was in the process of looking at a particular city for a new headquarters location. They had senior managers go to the city for a weekend to visit there. After the visit, it was decided that the city was out of contention. That was not part of any software algorithm. But the overall feeling of the place, the reality of what it would be like to live there, definitely played a role in the decision.
Q: Why did you feel there was a need for a better definition of intuition?
When you think about intuition or talk about it, the words you use are pretty fuzzy. They are synonyms like "gut feel" and "hunch." We thought those definitions are not very scientific. When we were talking to a manager, we needed to be more precise about what we were prescribing. When we dug into it, we found—as is often the case—that intuition is multidimensional. There is the gut-based dimension to it, but there is also an emotional element too, and a part that happens almost automatically or immediately. This allowed us to begin exploring what might be being used or not being used when you are following your intuition to make a decision. Was it based on experience and pattern recognition or something else?
When you are sitting in the board room, you can take the time to diagnose what the problem is and what decision to make. But you often don't have that luxury when you are in the middle of a negotiation with a supplier or a customer and multiple issues are arising at once. There's a lot going on at the same time: You have to digest the data being presented, read the emotions of your counterparts, and interpret why they are saying what they are saying and what they are not saying. In these situations, you often have to go with your gut. But it's real important to know when to hit the pause button and allow yourself to take a break and conduct further analysis. We tell managers that intuition does have a role in decision making. You should be listening to it, but not following it blindly. On the flip side, you can't always hit pause, so you need to be able to develop your skills of effectively using intuition.
Q: How should the intuition measurement scale that you developed be used?
The scale can mostly by used to identify the extent that various dimensions of intuition played a role in a supply management decision. It can be used for training purposes or after a negotiation as part of a post mortem to identify what part intuition played in the process.
Q: How do you think practitioners could apply your research?
The sky's the limit! We're making decisions every day. Even in the cases where machines are making decisions, they are not going to be making all the decisions. And even for those decisions that machines do make, humans are the ones developing the algorithms that drive those decisions and are the ones that monitor those algorithms.
Q: What do you see as the key takeaway message from your research?
I think it can be boiled down to: Don't discount the role of intuition in decision making, but don't blindly trust it either.
Benefits for Amazon's customers--who include marketplace retailers and logistics services customers, as well as companies who use its Amazon Web Services (AWS) platform and the e-commerce shoppers who buy goods on the website--will include generative AI (Gen AI) solutions that offer real-world value, the company said.
The launch is based on “Amazon Nova,” the company’s new generation of foundation models, the company said in a blog post. Data scientists use foundation models (FMs) to develop machine learning (ML) platforms more quickly than starting from scratch, allowing them to create artificial intelligence applications capable of performing a wide variety of general tasks, since they were trained on a broad spectrum of generalized data, Amazon says.
The new models are integrated with Amazon Bedrock, a managed service that makes FMs from AI companies and Amazon available for use through a single API. Using Amazon Bedrock, customers can experiment with and evaluate Amazon Nova models, as well as other FMs, to determine the best model for an application.
Calling the launch “the next step in our AI journey,” the company says Amazon Nova has the ability to process text, image, and video as prompts, so customers can use Amazon Nova-powered generative AI applications to understand videos, charts, and documents, or to generate videos and other multimedia content.
“Inside Amazon, we have about 1,000 Gen AI applications in motion, and we’ve had a bird’s-eye view of what application builders are still grappling with,” Rohit Prasad, SVP of Amazon Artificial General Intelligence, said in a release. “Our new Amazon Nova models are intended to help with these challenges for internal and external builders, and provide compelling intelligence and content generation while also delivering meaningful progress on latency, cost-effectiveness, customization, information grounding, and agentic capabilities.”
The new Amazon Nova models available in Amazon Bedrock include:
Amazon Nova Micro, a text-only model that delivers the lowest latency responses at very low cost.
Amazon Nova Lite, a very low-cost multimodal model that is lightning fast for processing image, video, and text inputs.
Amazon Nova Pro, a highly capable multimodal model with the best combination of accuracy, speed, and cost for a wide range of tasks.
Amazon Nova Premier, the most capable of Amazon’s multimodal models for complex reasoning tasks and for use as the best teacher for distilling custom models
Amazon Nova Canvas, a state-of-the-art image generation model.
Amazon Nova Reel, a state-of-the-art video generation model that can transform a single image input into a brief video with the prompt: dolly forward.
Economic activity in the logistics industry expanded in November, continuing a steady growth pattern that began earlier this year and signaling a return to seasonality after several years of fluctuating conditions, according to the latest Logistics Managers’ Index report (LMI), released today.
The November LMI registered 58.4, down slightly from October’s reading of 58.9, which was the highest level in two years. The LMI is a monthly gauge of business conditions across warehousing and logistics markets; a reading above 50 indicates growth and a reading below 50 indicates contraction.
“The overall index has been very consistent in the past three months, with readings of 58.6, 58.9, and 58.4,” LMI analyst Zac Rogers, associate professor of supply chain management at Colorado State University, wrote in the November LMI report. “This plateau is slightly higher than a similar plateau of consistency earlier in the year when May to August saw four readings between 55.3 and 56.4. Seasonally speaking, it is consistent that this later year run of readings would be the highest all year.”
Separately, Rogers said the end-of-year growth reflects the return to a healthy holiday peak, which started when inventory levels expanded in late summer and early fall as retailers began stocking up to meet consumer demand. Pandemic-driven shifts in consumer buying behavior, inflation, and economic uncertainty contributed to volatile peak season conditions over the past four years, with the LMI swinging from record-high growth in late 2020 and 2021 to slower growth in 2022 and contraction in 2023.
“The LMI contracted at this time a year ago, so basically [there was] no peak season,” Rogers said, citing inflation as a drag on demand. “To have a normal November … [really] for the first time in five years, justifies what we’ve seen all these companies doing—building up inventory in a sustainable, seasonal way.
“Based on what we’re seeing, a lot of supply chains called it right and were ready for healthy holiday season, so far.”
The LMI has remained in the mid to high 50s range since January—with the exception of April, when the index dipped to 52.9—signaling strong and consistent demand for warehousing and transportation services.
The LMI is a monthly survey of logistics managers from across the country. It tracks industry growth overall and across eight areas: inventory levels and costs; warehousing capacity, utilization, and prices; and transportation capacity, utilization, and prices. The report is released monthly by researchers from Arizona State University, Colorado State University, Rochester Institute of Technology, Rutgers University, and the University of Nevada, Reno, in conjunction with the Council of Supply Chain Management Professionals (CSCMP).
"After several years of mitigating inflation, disruption, supply shocks, conflicts, and uncertainty, we are currently in a relative period of calm," John Paitek, vice president, GEP, said in a release. "But it is very much the calm before the coming storm. This report provides procurement and supply chain leaders with a prescriptive guide to weathering the gale force headwinds of protectionism, tariffs, trade wars, regulatory pressures, uncertainty, and the AI revolution that we will face in 2025."
A report from the company released today offers predictions and strategies for the upcoming year, organized into six major predictions in GEP’s “Outlook 2025: Procurement & Supply Chain.”
Advanced AI agents will play a key role in demand forecasting, risk monitoring, and supply chain optimization, shifting procurement's mandate from tactical to strategic. Companies should invest in the technology now to to streamline processes and enhance decision-making.
Expanded value metrics will drive decisions, as success will be measured by resilience, sustainability, and compliance… not just cost efficiency. Companies should communicate value beyond cost savings to stakeholders, and develop new KPIs.
Increasing regulatory demands will necessitate heightened supply chain transparency and accountability. So companies should strengthen supplier audits, adopt ESG tracking tools, and integrate compliance into strategic procurement decisions.
Widening tariffs and trade restrictions will force companies to reassess total cost of ownership (TCO) metrics to include geopolitical and environmental risks, as nearshoring and friendshoring attempt to balance resilience with cost.
Rising energy costs and regulatory demands will accelerate the shift to sustainable operations, pushing companies to invest in renewable energy and redesign supply chains to align with ESG commitments.
New tariffs could drive prices higher, just as inflation has come under control and interest rates are returning to near-zero levels. That means companies must continue to secure cost savings as their primary responsibility.
Specifically, 48% of respondents identified rising tariffs and trade barriers as their top concern, followed by supply chain disruptions at 45% and geopolitical instability at 41%. Moreover, tariffs and trade barriers ranked as the priority issue regardless of company size, as respondents at companies with less than 250 employees, 251-500, 501-1,000, 1,001-50,000 and 50,000+ employees all cited it as the most significant issue they are currently facing.
“Evolving tariffs and trade policies are one of a number of complex issues requiring organizations to build more resilience into their supply chains through compliance, technology and strategic planning,” Jackson Wood, Director, Industry Strategy at Descartes, said in a release. “With the potential for the incoming U.S. administration to impose new and additional tariffs on a wide variety of goods and countries of origin, U.S. importers may need to significantly re-engineer their sourcing strategies to mitigate potentially higher costs.”
Freight transportation providers and maritime port operators are bracing for rough business impacts if the incoming Trump Administration follows through on its pledge to impose a 25% tariff on Mexico and Canada and an additional 10% tariff on China, analysts say.
Industry contacts say they fear that such heavy fees could prompt importers to “pull forward” a massive surge of goods before the new administration is seated on January 20, and then quickly cut back again once the hefty new fees are instituted, according to a report from TD Cowen.
As a measure of the potential economic impact of that uncertain scenario, transport company stocks were mostly trading down yesterday following Donald Trump’s social media post on Monday night announcing the proposed new policy, TD Cowen said in a note to investors.
But an alternative impact of the tariff jump could be that it doesn’t happen at all, but is merely a threat intended to force other nations to the table to strike new deals on trade, immigration, or drug smuggling. “Trump is perfectly comfortable being a policy paradox and pushing competing policies (and people); this ‘chaos premium’ only increases his leverage in negotiations,” the firm said.
However, if that truly is the new administration’s strategy, it could backfire by sparking a tit-for-tat trade war that includes retaliatory tariffs by other countries on U.S. exports, other analysts said. “The additional tariffs on China that the incoming US administration plans to impose will add to restrictions on China-made products, driving up their prices and fueling an already-under-way surge in efforts to beat the tariffs by importing products before the inauguration,” Andrei Quinn-Barabanov, Senior Director – Supplier Risk Management solutions at Moody’s, said in a statement. “The Mexico and Canada tariffs may be an invitation to negotiations with the U.S. on immigration and other issues. If implemented, they would also be challenging to maintain, because the two nations can threaten the U.S. with significant retaliation and because of a likely pressure from the American business community that would be greatly affected by the costs and supply chain obstacles resulting from the tariffs.”
New tariffs could also damage sensitive supply chains by triggering unintended consequences, according to a report by Matt Lekstutis, Director at Efficio, a global procurement and supply chain procurement consultancy. “While ultimate tariff policy will likely be implemented to achieve specific US re-industrialization and other political objectives, the responses of various nations, companies and trading partners is not easily predicted and companies that even have little or no exposure to Mexico, China or Canada could be impacted. New tariffs may disrupt supply chains dependent on just in time deliveries as they adjust to new trade flows. This could affect all industries dependent on distribution and logistics providers and result in supply shortages,” Lekstutis said.