Greetings, TSTers!

I’ve shaken off the holiday rust and am back in the swing of things, and I hope you are too. I’ve got some great insights for you in this issue, including some new tactics the auto industry is deploying to combat supply chain disruptions, and a major downside of the career switcher carousel. Plus, I’ll share some of the things I’ve been reading, watching, listening to, and thinking about.

Without further ado, let’s get this party started!

Industry Highlights: The Auto Industry's New Year's Resolutions

As we head into the third year of massive supply chain issues, most industries have started to accept their fate: Things will never go back to “normal.”

Rather than attempt to anticipate potential disruptions—be it more war, pandemics, or labor disputes—the auto industry is attempting to roll with the punches. Recently, the Harvard Business Review compiled five strategies automakers are adapting to become more resilient in 2023:

1. Deliver the “good enough” product

Not exactly what you want to hear as a consumer, but many companies are ditching the bells and whistles in favor of on-time product delivery. GM, for example, has eliminated some of their driver assistance features that rely on hard-to-obtain microchips.

The thinking is that consumers have learned to settle. They’d rather have a stripped down vehicle than no vehicle at all. The question remains: should the automakers plan to reintroduce these features once the components become more readily available? Or will a return to those standards only result in more disappointment down the line?

2. Develop better monitoring systems

Auto manufacturers have long tried to invent the crystal ball, finding ways to predict supply chain issues before they appear. But these last few years have demonstrated that investment to be a faulty one.

As such, many are pivoting to developing more accurate real-time monitoring systems, as well as protocols that increase reaction time to that data. This looks like monitoring commodity price exchanges and supplier production capacity utilization, which would help companies to better track supply/demand imbalances and better understand lead times.

3. Decentralize decision-making 

There’s a recent trend toward consolidating decision making into a single division or team, but in such a fluid environment, that could spell bad news. Many automakers are trying to strike a balance between centralized and distributed decision-making to stay nimble.

HBR gives the example of allowing a procurement team to make inventory policy decisions, while prioritizing the company’s supply chain risks and responses would fall to a centralized team.

4. Get pragmatic about crucial resources

There are plenty of tricks auto manufacturers can use to ensure they get the parts they need—like sourcing from multiple suppliers or paying premiums for guaranteed inventory—but for some components such as rare minerals or metals, this isn’t an option.

This has forced some companies to get resourceful. In Japan, for example, Toyota is only leasing its EVs so that it retains ownership of their batteries. It’s a good way to hedge against future shortages.

5. Turn scarcity into a virtue

Your undergrad Econ 101 course might have taught you to up your supply once demand increases, but given the recent demand volatility, that plan resulted in many companies sitting on a LOT of inventory. Most have made the decision to run as lean as possible.

In order to positively spin low inventory, some companies are turning to a velvet rope model, where they’re turning scarcity into a “premium” experience. Customers on the whole haven’t minded the additional wait times and higher prices if it means getting what they want because in this environment, that feels exclusive.

Overall, the auto industry is blazing a trail into this brave new world of snarly supply chains and shifting its mindset about how it’s always done things. I think it will be a blueprint for how other industries will react in the coming years.

What industry leaders SHOULDN’T do, however, is follow the lead of Tesla, who suddenly slashed prices on their EVs in China in an attempt to bump sales. The 10-15% price adjustment resulted in hundreds of disgruntled customers swarming dealerships and demanding the company return the price difference to them.

I’m not sure what the thinking was there, but it’s not a great look for a guy who has aspirations of inhabiting Mars one day. 

The Future of Work: The Training Treadmill

Employee turnover has been a problem area for most companies in the post-pandemic era, but now we’ve got enough data to see how big of an impact it’s having on productivity.

The Bureau of Labor Statistics reports that productivity has fallen in the last two years—bucking the predictions of many economists who believed a turn toward automation and innovation in the Covid era would boost these numbers.

Why the change? According to a recent New York Times article, many employers blame onboarding and training new employees as a huge time suck.

Employers reported that new hires not only take time to become productive, but they also require the attention of other employees to get them up to speed—employees who would otherwise be working on output.

The reason this is an issue is that productivity is the lifeblood of an organization—the more productive workers are, the more companies can pay them without adjusting price or profit margins. But as productivity dips, so does revenue. And competitive wages become harder to come by without affecting the company’s bottom line.

Economists generally see turnover as an indicator of a healthy economy. But too much at once causes problems. When companies are in a never-ending cycle of recruiting, hiring, and training, veteran employees are often expected to fill the void. This leads to burnout and departure, and the cycle continues.

The silver lining here is that turnover has lessened since the Great Resignation of 2021, and many employers expect that trend to continue. And some economists still persist in their belief that this reshuffling will yield long-term benefits because it’s increased flexibility. The people who work better at home will nab the best virtual jobs, leaving ample room for those who thrive best in an office setting.

Not exactly music to the ears of companies that have been patiently waiting to endure the Covid-induced storm.

The Supply Aside: What I’m Reading, Watching, Listening to, and Thinking About Re: Supply Chain, Work, and Beyond

📕 Read - America Is Lost in a Dark Forest...

Last year, I mentioned 2034: A Novel of the Next World War, a speculative book by Elliot Ackerman and US Navy Admiral James Stavridis about how our current actions could lead to global disaster. So it was fitting that I recently read this Time piece by Admiral Stavridis about our current state of political discourse and its future implications. He likens the US to being lost in a dark forest, and unless we follow the path out, our situation could be similar to the fantasy he wove in his novel. A wonderful, thoughtful read.

📺 Watch - Anything by Taylor Sheridan

I have a newfound appreciation for Taylor Sheridan. My introduction to him was via Tulsa King, the Sly Stallone show I mentioned in the last issue. What I didn’t realize was that Sheridan—according to this Wall Street Journal piece—writes every single show himself. That includes Yellowstone and the spinoffs 1883 and 1923. It’s tempted me to get involved in the Yellowstone universe. My question is: should I watch them in chronological order or start with Yellowstone first? I’d love your input.

👂 Listen - The Leadership Tales Podcast with Colin Hunter

I’m always interested in how leadership and culture can affect the business world, especially when it comes to recruitment and retention. This recent episode from The Leadership Tales Podcast with Colin Hunter showcases leadership coach Stephen Shedletzky, who talks about how inclusion, diversity and psychological safety in the workplace plays into making your company attractive for highly qualified candidates. Give it a listen here—and be on the lookout for when Colin interviews yours truly in the coming weeks!  

💡 Think - Chat GPT

I’m thinking a lot lately about this whole Chat GPT thing and how AI is set to change the world as we know it. As any parent with teenage kids will tell you, Chat GPT certainly brings up some questions from an academic perspective. But from a professional perspective, I’m wondering what the implications will be for supply chain negotiations. I read recently that some companies are using AI to conduct contract negotiations with their suppliers. If one party is using AI, are you better off using a chat bot or a human?

Chart of the Week

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Tweet of the Week

Finally...

Thanks so much for reading. I’d love to know what you think about this issue and how I can make it more useful to you.

If you have suggestions or topics you’re interested in seeing me address, shoot me an email at [email protected]!

I also want to give a quick shout out to Robbie Crabtree, an incredible storytelling coach who’s been instrumental in helping me improve my interactions with others through stories. Robbie has a newsletter called The Storyteller’s Playbook that you should definitely check out!

Want more?

If you’d like to read more of my writing on the supply chain, entrepreneurship, or the future of work, check out my website.

For timely updates follow me on LinkedIn and Twitter!

Happy reading this weekend!

-- Naseem