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.
Dockworkers at dozens of U.S. East and Gulf coast ports are returning to work tonight, ending a three-day strike that had paralyzed the flow of around 50% of all imports and exports in the United States during ocean peak season.
The two groups “have reached a tentative agreement on wages and have agreed to extend the Master Contract until January 15, 2025 to return to the bargaining table to negotiate all other outstanding issues. Effective immediately, all current job actions will cease and all work covered by the Master Contract will resume,” the joint statement said.
Talks had broken down over the union’s twin demands for both pay hikes and a halt to increased automation in freight handling. After the previous contract expired at midnight on September 30, workers made good on their pledge to strike, and all activity screeched to a halt on Tuesday, Wednesday, and Thursday this week.
Business groups immediately sang the praises of the deal, while also sounding a note of caution that more work remains.
The National Retail Federation (NRF) cheered the short-term contract extension, even as it urged the groups to forge a longer-lasting pact. “The decision to end the current strike and allow the East and Gulf coast ports to reopen is good news for the nation’s economy,” NRF President and CEO Matthew Shay said in a release. “It is critically important that the International Longshoremen’s Association and United States Maritime Alliance work diligently and in good faith to reach a fair, final agreement before the extension expires. The sooner they reach a deal, the better for all American families.”
Likewise, the Retail Industry Leaders Association (RILA) said it was relieved to see positive progress, but that a final deal wasn’t yet complete. “Without the specter of disruption looming, the U.S. economy can continue on its path for growth and retailers can focus on delivering for consumers. We encourage both parties to stay at the negotiating table until a final deal is reached that provides retailers and consumers full certainty that the East and Gulf Coast ports are reliable gateways for the flow of commerce.”
And the National Association of Manufacturers (NAM) commended the parties for coming together while also cautioning them to avoid future disruptions by using this time to reach “a fair and lasting agreement,” NAM President and CEO Jay Timmons said in an email. “Manufacturers are encouraged that cooler heads have prevailed and the ports will reopen. By resuming work and keeping our ports operational, they have shown a commitment to listening to the concerns of manufacturers and other industries that rely on the efficient movement of goods through these critical gateways,” Timmons said. “This decision avoids the need for government intervention and invoking the Taft-Hartley Act, and it is a victory for all parties involved—preserving jobs, safeguarding supply chains, and preventing further economic disruptions.”
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The U.S. manufacturing sector has become an engine of new job creation over the past four years, thanks to a combination of federal incentives and mega-trends like nearshoring and the clean energy boom, according to the industrial real estate firm Savills.
While those manufacturing announcements have softened slightly from their 2022 high point, they remain historically elevated. And the sector’s growth outlook remains strong, regardless of the results of the November U.S. presidential election, the company said in its September “Savills Manufacturing Report.”
From 2021 to 2024, over 995,000 new U.S. manufacturing jobs were announced, with two thirds in advanced sectors like electric vehicles (EVs) and batteries, semiconductors, clean energy, and biomanufacturing. After peaking at 350,000 news jobs in 2022, the growth pace has slowed, with 2024 expected to see just over half that number.
But the ingredients are in place to sustain the hot temperature of American manufacturing expansion in 2025 and beyond, the company said. According to Savills, that’s because the U.S. manufacturing revival is fueled by $910 billion in federal incentives—including the Inflation Reduction Act, CHIPS and Science Act, and Infrastructure Investment and Jobs Act—much of which has not yet been spent. Domestic production is also expected to be boosted by new tariffs, including a planned rise in semiconductor tariffs to 50% in 2025 and an increase in tariffs on Chinese EVs from 25% to 100%.
Certain geographical regions will see greater manufacturing growth than others, since just eight states account for 47% of new manufacturing jobs and over 6.3 billion square feet of industrial space, with 197 million more square feet under development. They are: Arizona, Georgia, Michigan, Ohio, North Carolina, South Carolina, Texas, and Tennessee.
Across the border, Mexico’s manufacturing sector has also seen “revolutionary” growth driven by nearshoring strategies targeting U.S. markets and offering lower-cost labor, with a workforce that is now even cheaper than in China. Over the past four years, that country has launched 27 new plants, each creating over 500 jobs. Unlike the U.S. focus on tech manufacturing, Mexico focuses on traditional sectors such as automative parts, appliances, and consumer goods.
Looking at the future, the U.S. manufacturing sector’s growth outlook remains strong, regardless of the results of November’s presidential election, Savills said. That’s because both candidates favor protectionist trade policies, and since significant change to federal incentives would require a single party to control both the legislative and executive branches. Rather than relying on changes in political leadership, future growth of U.S. manufacturing now hinges on finding affordable, reliable power amid increasing competition between manufacturing sites and data centers, Savills said.
The number of container ships waiting outside U.S. East and Gulf Coast ports has swelled from just three vessels on Sunday to 54 on Thursday as a dockworker strike has swiftly halted bustling container traffic at some of the nation’s business facilities, according to analysis by Everstream Analytics.
As of Thursday morning, the two ports with the biggest traffic jams are Savannah (15 ships) and New York (14), followed by single-digit numbers at Mobile, Charleston, Houston, Philadelphia, Norfolk, Baltimore, and Miami, Everstream said.
The impact of that clogged flow of goods will depend on how long the strike lasts, analysts with Moody’s said. The firm’s Moody’s Analytics division estimates the strike will cause a daily hit to the U.S. economy of at least $500 million in the coming days. But that impact will jump to $2 billion per day if the strike persists for several weeks.
The immediate cost of the strike can be seen in rising surcharges and rerouting delays, which can be absorbed by most enterprise-scale companies but hit small and medium-sized businesses particularly hard, a report from Container xChange says.
“The timing of this strike is especially challenging as we are in our traditional peak season. While many pulled forward shipments earlier this year to mitigate risks, stockpiled inventories will only cushion businesses for so long. If the strike continues for an extended period, we could see significant strain on container availability and shipping schedules,” Christian Roeloffs, cofounder and CEO of Container xChange, said in a release.
“For small and medium-sized container traders, this could result in skyrocketing logistics costs and delays, making it harder to secure containers. The longer the disruption lasts, the more difficult it will be for these businesses to keep pace with market demands,” Roeloffs said.
Jason Kra kicked off his presentation at the Council of Supply Chain Management Professionals (CSCMP) EDGE Conference on Tuesday morning with a question: “How do we use data in assessing what countries we should be investing in for future supply chain decisions?” As president of Li & Fung where he oversees the supply chain solutions company’s wholesale and distribution business in the U.S., Kra understands that many companies are looking for ways to assess risk in their supply chains and diversify their operations beyond China. To properly assess risk, however, you need quality data and a decision model, he said.
In January 2024, in addition to his full-time job, Kra joined American University’s Kogod School of Business as an adjunct professor of the school’s master’s program where he decided to find some answers to his above question about data.
For his research, he created the following situation: “How can data be used to assess the attractiveness of scalable apparel-producing countries for planning based on stability and predictability, and what factors should be considered in the decision-making process to de-risk country diversification decisions?”
Since diversification and resilience have been hot topics in the supply chain space since the U.S.’s 2017 trade war with China, Kra sought to find a way to apply a scientific method to assess supply chain risk. He specifically wanted to answer the following questions:
1.Which methodology is most appropriate to investigate when selecting a country to produce apparel in based on weighted criteria?
2.What criteria should be used to evaluate a production country’s suitability for scalable manufacturing as a future investment?
3.What are the weights (relative importance) of each criterion?
4.How can this methodology be utilized to assess the suitability of production countries for scalable apparel manufacturing and to create a country ranking?
5.Will the criteria and methodology apply to other industries?
After creating a list of criteria and weight rankings based on importance, Kra reached out to 70 senior managers with 20+ years of experience and C-suite executives to get their feedback. What he found was a big difference in criteria/weight rankings between the C-suite and senior managers.
“That huge gap is a good area for future research,” said Kra. “If you don’t have alignment between your C-suite and your senior managers who are doing a lot of the execution, you’re never going to achieve the goals you set as a company.”
With the research results, Kra created a decision model for country selection that can be applied to any industry and customized based on a company’s unique needs. That model includes discussing the data findings, creating a list of diversification countries, and finally, looking at future trends to factor in (like exponential technology, speed, types of supply chains and geopolitics, and sustainability).
After showcasing his research data to the EDGE audience, Kra ended his presentation by sharing some key takeaways from his research:
China diversification strategies alone are not enough. The world will continue to be volatile and disruptive. Country and region diversification is the only protection.
Managers need to balance trade-offs between what is optimal and what is acceptable regarding supply chain decisions. Decision-makers need to find the best country at the lowest price, with the most dependability.
There is a disconnect or misalignment between C-suite executives and senior managers who execute the strategy. So further education and alignment is critical.
Data-driven decision-making for your company/industry: This can be done for any industry—the data is customizable, and there are many “free” sources you can access to put together regional and country data. Utilizing data helps eliminate path dependency (for example, relying on a lean or just-in-time inventory) and keeps executives and managers aligned.
“Look at the business you envision in the future,” said Kra, “and make that your model for today.”