Possibly the most brilliant logistician of the biblical age, Joseph, can teach us a lot about the importance of logistics today.
Joseph’s exceptional forecasting and planning abilities put him on a fast track to promotions. He ascended rapidly from the role of prisoner/superintendent in an Egyptian jail, to Pharaoh’s Chief Logistics Officer with “Prince” in his title. At the peak of his career, the man was second only to Pharaoh.
Let’s recap Joseph’s rise to capture the full significance of his story in the modern day.
After being sold by his brothers to a group of nomad Ishmaelites for “twenty [pieces] of silver” (Genesis 37:28), he was brought to Egypt, “and Potiphar, an officer of Pharaoh, captain of the guard, an Egyptian, bought him of the hands of the Ishmaelites” (Genesis 39:1). He rose to be Potiphar’s chief of staff: “…he had made him overseer in his house and over all that he had…” (Genesis 39:5). Unfortunately, after rebuking the advancements of Potiphar’s wife “And she caught him by his garment saying, Lie with me: and he left his garment in her hand, and fled” (Genesis 39:12). Joseph was the subject of a wrongful sexual harassment accusation, and ended up in jail.
Even there, Joseph’s leadership qualities shone through: “And the keeper of the prison committed to Joseph’s hand all the prisoners” (Genesis 39:22).
What is less known, however, is that during his years in prison Joseph mastered forecasting techniques, interpreting the dreams of Pharaoh’s former Chief Butler and Chief Baker. Both interpretations were realized, cementing Joseph’s reputation as a master forecaster.
During these years, he also developed an understanding of the Egyptian business cycle. He clearly saw that the nation’s economy was based on a seven-year phase, but lacked the means to convey his findings to senior management.
Joseph’s big career break came when Pharaoh had two strange dreams.
In the first Pharaoh dream, “there came up out of the river seven well favoured kine and fatfleshed; and they fed in a meadow. And, behold, seven other kine came up after them out of the river, ill favoured and leanfleshed; and stood by the other kine upon the brink of the river. And the ill favoured and leanfleshed kine did eat up the seven well favoured and fat kine” (Genesis 41:2-4). In the second dream, “seven ears of corn came up upon one stalk, rank and good. And, behold, seven thin ears and blasted with the east wind sprung up after them. And the seven thin ears devoured the seven rank and full ears” (Genesis 41:5-7).
Pharaoh was troubled by these visions, and decided to use a standard Delphi technique to interpret them. But this tried and true method failed to produce results. “…he sent and called for all the magicians of Egypt, and all the wise men thereof: and Pharaoh told them his dream; but there was none that could interpret them unto Pharaoh” (Genesis 41:8).
After this failure, Pharaoh decided to look for a supplier with a proven track record. His Chief Butler told Pharaoh about a prisoner named Joseph who successfully interpreted one of his dreams. “And it came to pass, as he interpreted to us” (Genesis 42:13). The boss was intrigued.
Pharaoh summoned Joseph and outlined his dreams to the prisoner. Joseph seized the moment. He immediately put his theory to practice and delivered his core belief to Pharaoh: “Behold, there come seven years of great plenty throughout all the land of Egypt: And there shall arise after them seven years of famine; and all the plenty shall be forgotten in the land of Egypt; and the famine shall consume the land” (Genesis 40:29-30).
But Joseph was not an academic forecaster for whom it would have been enough to deliver a papyrus in a conference of the Egyptian statistical society. He also offered a mitigation plan based on inventory theory. Utilizing a single period Newsvendor model, Joseph outlined his plan, including an organization framework: “Now therefore let Pharaoh look out a man discreet and wise, and set him over the land of Egypt…, and let him appoint officers over the land, and take up the fifth part of the land of Egypt in the seven plenteous years. And let them gather all the food of those good years that come, and lay up corn under the hand of Pharaoh, and let them keep food in the cities. And that food shall be for store to the land against the seven years of famine” (Genesis 41:33-36).
Thus, the basic tenant of economic order quantity came into being.
Joseph’s plan was based on locating warehouses and distribution centers in every Egyptian city. Over a 14-year year time span, he planned to balance production and consumption rates using a long-term S&OP process, so that the supply chain would perform continuously and demand would be satisfied without stock-outs. Pharaoh, who had probably listened to as many consultants as the next CEO, decided to let this one actually execute the proposed plan. He knew that the key to success was the commitment of senior management, and immediately empowered Joseph: “And Pharaoh said unto Joseph, … Thou shalt be over my house, and according unto thy word shall all my people be ruled: only in the throne will I be greater than thou” (Genesis 41:39-41).
To show his faith in his new chief logistics officer, Pharaoh offered him a generous compensation package. He “took off his ring from his hand, and put it upon Joseph’s hand, and arrayed him in vestures of fine linen, and put a gold chain about his neck” (Genesis 41:42).
Naturally, Joseph had also an at-risk component as part of his package – the Pharaohs were known to execute underlings who failed them. This component of his package may help to explain Joseph’s reluctance to use pure economic order quantity principles or lean inventory principles, trading off inventory carrying cost vs. service level. Instead, he simply minimized the chance of a stock-out – something very familiar to parts suppliers today.
After building his decentralized warehousing system, “Joseph gathered corn as the sand of the sea, very much, until he left numbering; for [it was] without number” (Genesis 41:49).
The scheme worked very well and during the famine years Egyptians did not suffer but prospered. “And the famine was over all the face of the earth: And Joseph opened all the storehouses, and sold unto the Egyptians; and the famine waxed sore in the land of Egypt.” International sales territories were set and global supply chains were even established with foreign countries. “And all countries came into Egypt to Joseph for to buy [corn]; because that the famine was [so] sore in all lands” (Genesis 41:56-57).
Joseph used his market position as a sole supplier to perform several acquisitions that solidified the competitive position of Pharaoh’s Egypt. “And Joseph gathered up all the money that was found in the land of Egypt, and in the land of Canaan, for the corn which they bought: and Joseph brought the money into Pharaoh’s house.”
The next phase of Joseph’s strategic vision involved an aggressive asset purchase followed by a forceful acquisition strategy. “And when money failed in the land of Egypt, and in the land of Canaan, all the Egyptians came unto Joseph, and said, Give us bread: …And Joseph said, Give your cattle” (Genesis 47:15-16). After the population ran out of cattle and livestock, “Joseph bought all the land of Egypt for Pharaoh; for the Egyptians sold every man his field, because the famine prevailed over them: so the land became Pharaoh’s” (Genesis 47:20).
At the end of that business cycle, Pharaoh ended up as the sole owner of all productive resources in Egypt and beyond, a position he used to establish a new business model, structuring a lease deal for the cultivation of the land. “Then Joseph said unto the people, Behold, I have bought you this day and your land for Pharaoh: lo, [here is] seed for you, and ye shall sow the land” (Genesis 47:23). Furthermore, Joseph instituted a subscription system. “And Joseph made it a law over the land of Egypt unto this day, [that] Pharaoh should have the fifth [part].”
After a long and productive career as Pharaoh’s COO, Joseph was entitled to a state funeral when he passed away: “So Joseph died, [being] an hundred and ten years old: and they embalmed him, and he was put in a coffin in Egypt” (Genesis 50:26).
The story demonstrates several key principles that are as true today as they were during Joseph’s time in Egypt (somewhere between 1500 and 2000 BC).
First, the importance of forecasting and interpretation of various warning signals in avoiding supply chain disruptions; second, the role of redundancy in general and especially safety stock in allowing the supply chain to keep delivering goods under adverse conditions; third, the important role of regulatory agencies in preventing abuses of monopoly power – even if it comes out of brilliant business acumen.
Finally, Joseph’s story demonstrates that good logistics skills are an important path to an upper management position.