A conversation with Venkatesh Srinivasan, VP of Global Supply Chain at Diamond Foundry
Venkatesh Srinivasan is VP of Global Supply Chain at Diamond Foundry. In Volume 28 – 2026 of the Supply Chain Leaders in Action (SCLA) Journal, he recently wrote about how to organize supply chain work with all the variability that occurs, including both daily and special cause events. Here we discuss his insights for the benefit of the OSI audience. His views are his own.
When shocks keep coming
Edward: You open with a string of hits: tariffs in 2018, a pandemic in 2020, chip shortages, then more tariffs in 2025. What was that like to live through?
Venkatesh: In the spring of 2018 I told my team of engineers and sourcing managers to “buckle down and move our operations.” We were ramping up production for a product made in Asia. Four months later a country-specific tariff hit and wiped out our margins. In 2020 I was about to launch a new product made in Turkey when the pandemic hit. It ate into margins, lead times and production buffers all at once. Then came wild demand swings, cost increases and semiconductor shortages, and new tariffs in 2025.
Edward: And you say this isn’t new.
Venkatesh: Look back further and the pattern repeats. The 2007 financial crisis caused a severe recession, and its supply chain effects ran deeper and longer than the economic ones. Recessions like that drain industries, restrict capacity and put supply and demand out of line for years. Theorists call this VUCA: volatile, uncertain, complex and ambiguous.
Edward: In operations science, every one of those events is a form of variability. A system always pays for variability with some mix of three buffers: inventory, capacity or time. If leaders don’t choose the mix, the system chooses for them, and it usually chooses time. That shows up as late orders, poor on-time delivery, constant expediting, and lost profitability and cash flow.
Supply chain is not a department
Edward: So, in a world of VUCA, or variability, what is the best way to manage from a supply chain perspective?
Venkatesh: Leaders need to act with vision and preparation. “Looking around the corners” is now a core skill, not jargon. We have to stop treating supply chain as a standalone department. Instead, we should rebuild it as a set of active supply chain partners working across the whole organization.
Edward: That fits what we see in client coaching. Much of the variability the supply chain absorbs is created somewhere else: in a design choice, a sales promise or a production schedule. A supply chain at the end of the decision line can only react. A supply chain as partner in the room when those choices are made can help shape the policies that provide the best overall results.
A supply chain partner with an operations science framework can help the organization decide the best course of action through an objective, numbers-based analysis.
Edward: How should those partners decide where to spend their time?
Venkatesh: With clear, ranked priority sets. I picture them as rings. The farther an activity sits from the center, the less time it should get. Without that ranking, teams put in effort without getting matching results. I use four sets: Define, Curate, Simulate and Adapt.
Define, Curate, Simulate, Adapt: a supply chain playbook
Define: where profit margin is set
Edward: Start at the center.
Venkatesh: Define is the first and most important set. Supply chain priorities come from the organization’s larger goals, so the team has to learn exactly what is expected of it, when and why. That means understanding the target customer and how they will use the product. Which features does that customer need, and how do those features shape industrial, product, and software design? Features also drive certification needs, which affect test costs and launch dates.
Edward: And overall product cost.
Venkatesh: Yes. We need a cost for each feature and for the product as a whole, and purchasing has to take an active part. Those numbers flow into cost of goods sold, gross margin, list price, and sales at that price point. Purchasing teams should spend most of their time here, because this stage decides suppliers, material options, and much else.
Edward: This is where most manufacturing profit margin is set. Much of a product’s cost, and much of its variability, is fixed before the first unit is built. A design that needs a sole-source part with a long lead time has already chosen a larger inventory buffer or a greater risk of late orders. Few P&Ls show that link, so when margin slips later, the plant takes the blame. Additionally, operations science shows that generating the most cash flow possible in operations means getting the products with the highest contribution margin through the constraint. This should be a major consideration in product design.
How we cut product cost by two-thirds despite tariffs
Curate: where cash flow is set
Edward: The second ring?
Venkatesh: Curate takes the most time. Here we turn product choices into a working supply network. That network rests on three things: manufacturing constraints, the demand profile, and warehousing and distribution choices. Production methods, process yields, and factory locations drive cost, quality, lead times, and inventory buffers. The demand profile is closely tied in: the timing of production events is the single biggest factor in the cash flow profile. That is the heart of active supply management. Good distribution choices keep costs low, fill orders fast, and keep customers satisfied.
Edward: Timing and cash flow are tightly linked, and Little’s Law shows how. Work in process equals throughput times cycle time. WIP is visible cycle time. At the same throughput, more WIP means more cash tied up in inventory and longer cycle times. So the surest way to optimize cash flow in manufacturing is to manage WIP levels to achieve required throughput, and no more, which then results in shortest possible cycle time.
It also explains why so many companies can’t reduce inventory without hurting service levels. Inventory is a buffer against variability. Cut the buffer and not the variability, and service drops and backorders grow.
Also, manufacturing constraints don’t stay put. When product mix or demand changes, the bottleneck moves. Shifting bottlenecks are one reason operations that performed well last quarter fall behind this quarter. Operations science shows how to set up operations controls to manage those shifting bottlenecks without a lot of effort.
Why deterministic finance fails in operations: buffers vs. capacity
Simulate: finding the break points early
Edward: The third ring is Simulate. When do most teams do that work?
Venkatesh: Often in the “off-season,” in reviews after a launch. Smart supply chain managers model edge cases and corrective actions ahead of time. Despite our best work on Define and Curate, we still get pulled off course by long fulfillment times, rising costs, and legal issues. We should forecast those and simulate where things break, so we can correct our choices. Typical cases are changes in metal markets, buying futures, currency swings, shipping times, and long lead times. Then we have to champion those models with finance, legal, and plant operations and argue for what is best for the organization. Being deliberate here frees up time and energy later.
Edward: One thing I’d add for anyone building those models: the break points rarely show up in averages. A plan can look fine on average utilization and still see cycle times jump when a few bad weeks stack up, because queues grow sharply as utilization nears 100%. That is also why adding work doesn’t always add output. Often the fastest way to increase throughput without adding capacity is to release less work into the system, not more.
Plan, simulate and adapt: preparing for uncontrollable risks
Adapt: the outer ring
Edward: And the outer ring?
Venkatesh: Adapt covers what supply chain leaders control least: monetary policy, geopolitics, and economic slowdowns. By the time these arrive it is often too late to act, so our energy is best spent anticipating them as part of broader economic forecasting and preparing our teams for hard seasons. If we’ve done the work in the first three sets, we should handle these challenges better than others. The best-run companies gain market share in chaotic times, when weaker competitors falter.
Edward: How would you sum it up?
Venkatesh: A company’s supply chain is a direct reflection of its strategic choices. Top performers put supply chain teams into every value stream, set priority sets, and spend their energy to match. It all shows up in the metrics we obsess over: cost, quality and delivery. The main thing is to keep the main things the main thing! What is your priority set?
A closing note
Venkatesh’s Define, Curate, Simulate and Adapt rings answer where supply chain leaders should spend their time. Operations science adds a second question. What level of variability are you willing to accommodate and which buffer is your system using to absorb it: inventory, capacity, or time? And is that the buffer you chose?
Most leadership teams can’t answer that from their current reports. That isn’t a failure of effort. The reports were never built to show it.
Our Executive Operations Assessment is built to map where variability enters your operation, which buffers absorb it, what that costs you in margin and cash, and how to manage the variability for best possible profitability, cash flow and on-time delivery. You can learn more at insider.opscience.org.
Edward Pound is the Managing Director of the Operations Science Institute. He can be reached at [email protected].
The full conversation with Venkatesh will be released on the Operations Science Podcast on November 11th. Save the date!
