Jim Tompkins: "Optimization Is Outdated" — Why Optionality Beats Efficiency

In this episode of Rozmowy Logistyków (recorded in English), Piotr Skobało and Adam Sobolewski host Jim Tompkins, who over a 50-year career founded 15 companies with combined revenue exceeding 2 billion dollars. They discuss why the classic approach to supply chain optimization is aging, and why flexibility is starting to beat pure efficiency.

FROM MATERIAL FLOW TO SUPPLY CHAIN

Jim Tompkins started his career before the term "supply chain" existed — people talked about "material flow": what comes into the factory, what happens inside it, what goes out. The key lesson from that period that he carried through his entire career: look at the whole ecosystem — a network of connected functions, not isolated, individual links. That perspective shaped his approach for good: wherever he went (a shop, a restaurant, a theater), he started seeing everything through the lens of the flow of materials, information, and cash.

THREE ERAS: EFFICIENCY, EFFECTIVENESS, RESILIENCE

The 1990s were pure cost efficiency — how to lower transport cost, how to shrink inventory. Around 2005, effectiveness joined in — the realization that a supply chain can drive sales, not just cut costs (example: a company that delivers a t-shirt in a week beats a competitor that needs a month, even at a higher price). The 2020 pandemic added a third dimension — resilience, forced by the tangible shock of basic products missing from shelves. A side effect of this last shift: supply chain finally earned a seat at the boardroom table — "we got respect," as Tompkins put it, and boards started understanding how critical this function is to the whole business.

JUST-IN-TIME VS. JUST-IN-CASE: A FALSE DILEMMA

After the pandemic, many companies declared the end of Just-in-Time inventory in favor of Just-in-Case — the effect: full shelves, but profitability eaten up by excessive warehousing and transport costs. The real lesson wasn't about choosing between these two models, but about building the capacity to handle uncertainty through visibility and connectivity across the entire ecosystem of suppliers and customers — not in isolated, individual links.

A REAL EXAMPLE: FROM EIGHT TO FOUR INVENTORY TURNS AND BACK UP TO ELEVEN

A company producing food for grocery stores had 8 inventory turns a year before the pandemic, without measuring shelf availability at all (assumed to be 100%). After the pandemic, supplier on-time delivery dropped to 65%, shelf availability to 87% — the response was to increase inventory, which cut turns to 4 a year and sparked conflict with the CFO (the budget assumed 8 turns). The fix was replacing spreadsheets and phone calls with digital supply networks offering full visibility — the result: delivery on-time-and-in-full at 99.6%, shelf availability at 98.2%, and inventory turns rising to 11 a year — a better result than before the pandemic, achieved through investment in visibility, not by going back to the old model.

"OPTIMIZATION IS OUTDATED"

Tompkins, a PhD in industrial engineering trained precisely in optimization, now argues that searching for a single optimal solution for a given data set is a mistake — because the pace of change demands optionality, not optimality. The most "optimal" supply chain (e.g. built around one, best transport supplier) is, in today's world, a broken chain, because it has no backup path in case of disruption.

STRATEGY BEFORE STRUCTURE

A key leadership principle: first understand what the company is trying to achieve, only then design the structure of the solution. A common organizational mistake is a team lacking alignment on the very definition of the strategy — different people believe they're pursuing different goals, despite the appearance of teamwork. A leader's role isn't "managing change" (Tompkins openly rejects that term), it's leading change — being a "cheerleader," not a manager, minimizing the influence of those defending the status quo.

YOUR COMPANY VS. YOUR COMPETITOR'S SUPPLY CHAIN

A key shift in competitive perspective: it's not company versus company, it's your company's supply chain versus your competitor's supply chain. Better to be an average company with a great supply chain than a great company with an average supply chain — because it's the latter element that decides whether a company survives in the market.

NEARSHORING, END-TO-END, AND AUTONOMOUS SUPPLY CHAINS

Tompkins predicts strengthening Europe-US trade relationships and "friendshoring" (trade with trusted partners) at the expense of relationships with parts of the Middle East, Korea, and Russia. He sees growing importance in tracking the chain from raw material (metal, wood, water) all the way to the consumer, and an approaching wave of automation and AI replacing physical labor with robots and autonomous warehouses — eventually building autonomous supply chains capable of operating despite high uncertainty. A key caveat: we won't replace supply chain leaders with artificial intelligence — it's human experience that understands the consequences of decisions in a way data alone can't capture.