As the former Global Head of Supply Chain Planning & Analytics for home goods giant Wayfair, Nicole Xu T’11 knows a thing or two about managing challenges like manufacturing slowdowns and labor shortages. But Xu, now COO at Boston-based health tech startup ZOE, wants the world to know that operations leadership in a digital world goes far beyond making and shipping goods.

Though Xu matriculated at Tuck without any intention of focusing on operations, Professor Joe Hall’s Operations Management course soon won her over. “He was able to broaden my understanding far past my simplistic view,” she explains. "In the real world, you see that operations management is central to everything. It’s that variation and problem-solving that has kept me engaged throughout my career.”  

We asked Xu for her tips for operations leaders—and her thoughts on the ongoing supply chain crisis.

My Advice for Employers

When people ask what operations is, I find that it’s easier to tell them what operations isn’t. Essentially, the day to day of every business is operations. People tend to only think about it in relation to manufacturing and physical goods, but so much today is digital, including functions like customer service that fall under operations. For a lot of MBA students, operations doesn’t sound the most sexy. But I’d urge them to give it a chance—it’s full of fun and challenging problems to solve, and it’s so critical to every company.  

There’s this extreme sense of urgency on a day-in, day-out level, with minute-to-minute promises you have to deliver on. Then there’s the medium-term thinking. Most manufacturing in China happens in batches at certain times. You have to plan ahead for that window, so that means preparing for the holidays starts in March. And over the long term, you have to project and plan for the business’s future needs. Building a warehouse, from finding a location to hiring the labor, usually takes at least 24 months, if not a few years.  

When you think about supply chain and logistics, picture a set of dominos. All these pieces are linked together. With physical goods, supply chains with raw materials start in a factory in Asia. Then they go to a container ship; then they’re transferred to a truck; then a warehouse, all before they ship to you. If one of the dominos in the middle falls, suddenly you’re in a situation where you have blockages on both ends. The pandemic has been especially complicated because upstream manufacturing in Asia stopped just as demand rose in the US, creating a squeeze on both sides.  

When the supply chain gets backed up, it’s very difficult to catch up. If you’re already running a 24x7 operation to meet demand and you have a two-month disruption, what do you do? But most companies aren’t willing to think about their maximum capacity and what will happen if demand exceeds it. They want to match capacity to demand so they don’t spend money on capacity they don’t use.  

We need to come to peace with the overall health of the industry and our labor. There has been a shortage of frontline workers, like those working in warehouses, for a long time, but the pandemic made it so much worse since many people permanently excited the market. The job has also become more dangerous, and as a result, people are demanding more pay. That may mean we need to reevaluate the cost of labor and what is appropriate compensation to make a healthy, good environment. Companies are going to pay more, and the cost will eventually get passed on to consumers.  

This crisis might be an opportunity for innovation. I think people will learn and try to stay on top of things. In supply chain management, you don’t want to have a single source or only work with one shipper, carrier, or packaging company. Diversify your portfolio of vendors and sourcing, no matter which part of the supply chain you’re looking at. It will come at some cost, but the more you diversify, the more prepared you will be. You need to get ahead of disruptions and have a contingency plan.  

There’s almost always a way to make things work. If you’re out of supplies, you can start a waitlist and give people a 10% discount if they sign up. There are things you can do really fast digitally and things you can do medium term. For example, ramping labor might not be as quick, but it could be done over three months. Every problem in your supply chain will have a different time frame for how long it takes to solve, and you just have to come up with a targeted solution to minimize those delays.