Game Changing Trends in Supply Chain: Part V

In this final segment in our series on game changing trends in supply chain we review in more depth the last two of the ten trends:

• Training to knowledge based learning
• Information hoarding to information sharing and visibility

Game Changing Trend: Training to Knowledge Based Learning

Fifteen years ago, the supply chain leader in most companies held a title such as “vice president of logistics.” It was a largely functional role that relied on technical proficiency in discrete areas: knowledge of shipping routes, familiarity with warehousing equipment and distribution-center locations and footprints, and a solid grasp of freight rates and fuel costs. He reported to the chief operating officer or chief financial officer, had few prospects of advancing further, and had no exposure to the executive committee. The way companies need to think of the modern supply chain executive has changed dramatically.

Supply chain executives still need to be experts at managing supply chain functions such as transportation, warehousing, inventory management and production planning. But the supply chain process extends end-to-end and even outside the firm, including the relationships with suppliers and customers on a global basis. Leading firms now see the supply chain functional leader as the executive to coordinate the end-to-end supply chain process, even though he or she does not control it all. Because of that added dimension of cross-function, cross-company coordination, senior supply chain executives must possess a number of unique characteristics.

Supply Chain as Part of the Executive Team

Today, in a growing number of firms, the supply chain chiefs of high-performance companies don’t just have access to the executive team ― they’re part of it. That role requires the need to bring value in terms not only of educating the CEO and the Board and giving them the vocabulary to talk about supply chain subjects and its critical role in creating economic profit, but in finding and driving opportunities to increase economic profit. The job in those progressive firms is no longer a mostly functional one, but instead plays a key strategic role that can influence 60 to 70 percent of a company’s total costs, all of its inventory, and most aspects of customer service.

The supply chain leader in these progressive firms has global responsibility for coordinating processes across functional silos like sales, R&D, and Finance, as well as functional responsibility for activities like procurement, logistics operations and production planning, and customer service. He or she pays as much attention to the demand side as to production and materials planning, and knows what it takes to reliably deliver products to customers and to build mechanisms to learn what customers have to say.

Finding talented people who can grow into these roles is, according to one of our surveys, the most challenging aspect of supply chain people management. Developing, retaining, and evaluating talent are also daunting tasks, but simply finding and successfully hiring top talent seems to be the most challenging of all.

Demand for the most talented supply chain professionals will continue to rise, and hiring and retaining them will continue to tax the best organizations. It is obvious that companies must “sell the opportunity” to candidates much more adroitly. So what must firms do to ensure that they have the supply chain experts who can drive true strategic success? First they must create the right environment; then acquire the very best supply chain talent available; and finally, aggressively develop that talent. Finding top talent starts with identifying its critical characteristics.

The Critical Competencies of Top Supply Chain Talent

The best talent can only be acquired after it has been identified. To select the right people to oversee the increasingly pivotal supply chain responsibility, firms must know the blueprint for the “dream” supply chain leader. Our recent book, The New Supply Chain Agenda , groups these characteristics into five key competencies:

• Global orientation
• Cross functional-cross company understanding
• Leadership skills
• Technical and Analytics savvy
• Superior business skills

Global orientation

Of course, nearly all senior business executives today need to be globally capable. Global sourcing and global supply chains have expanded tremendously in recent years, for both retailers and manufacturers. There are few companies that do not either source globally, sell globally, or have competitors that do. Therefore supply chain executives must manage like never before an enterprise that extends across continents and must deal effectively with suppliers and customers worldwide.

Cross Functional-Cross Company Understanding

Unlike some other senior executives, supply chain executives must embrace the added dimension of cross-functional and cross-company complexity – the challenge that comes with thinking of the end-to-end supply chain as an integrated system. Manufacturing or Sales executives must develop deep expertise, and a strategy for their area. But, the supply chain executive must also comprehend the connections and interdependencies across procurement, logistics, manufacturing, and marketing/sales. In addition, he or she must also absorb the complexity of interfaces outside the firm, with suppliers and customers.

Leadership Skills

A growing number of today’s supply chain leaders are front-and-center within the organization. They must be able to foster close interpersonal relationships that build credibility for them and for the function across the organization. They must be able to build teams and manage people, and must communicate their message compellingly to multiple stakeholders. They find themselves in the position of having to influence others in the firm to work together to create a world-class supply chain. They are masters at building close collaborative relationships with their companies’ leaders in sales and marketing, human resources and finance to get the whole picture.

Technical and Analytics Savvy:

Technology has become a key enabler of supply chain excellence, and spending on supply management applications and services continues apace. Indeed, in our work across hundreds of companies, including retailers, manufacturers, and service providers, we almost always see that supply chain often consumes the majority of the IT spend in firms, with that spending supporting warehouse management systems, transportation management systems, inventory management and production planning systems, et cetera. The supply chain chief need not be credentialed in IT systems or other technology areas, but he or she must know what to avoid and what questions to ask to successfully guide the implementation of new supply chain technologies.

Superior Business Skills:

Supply chain leaders must be business people first and supply chain specialists second. Their foremost focus must be on enhancing economic profit and shareholder value, not simply on cost cutting. Supply chain leaders must be able to speak the language of senior executives as easily as they can talk about fleet-truck efficiencies or demand forecasting. Terms such as EBITDA, ROIC, and shareholder value should be part of their everyday parlance, and supply chain leaders should be as comfortable discussing cash flow with the treasurer’s office as they are with talking about delivery schedules with suppliers. Supply chain issues are often the least understood by the Board and the CEO, and must be explained in their language.

Acquire the Best Talent

After carefully determining the right mix of functional proficiencies, and the right combination of the five universal characteristics discussed above, companies must enter the contest for talent. Engaging in the battle for scarce talent involves viewing the world, other industries, and supply chain management training programs as the talent basket. Supply chain management is no longer limited by national borders, or industry boundaries. Leading practitioners today consider the world their “talent basket”; and they extend their searches accordingly to India, China, Brazil, Europe and beyond.

From Training to Knowledge Based Learning

Finally comes the need to develop talent for key supply chain process roles. This involves creating a professional development plan for every manager in the supply chain organization. Too many supply chain managers lack sufficient knowledge of how the rest of the company runs. Leading firms think creatively as they create ways to develop the talent needed. Any global approach to talent will not succeed easily; it will require a major effort, involving detailed planning of an array of leadership development initiatives.

Universities especially are stepping up not only with more appropriate education for the growing numbers of aspiring supply chain leaders, but with executive education programs that help shore up the business savvy of established supply chain specialists. When it comes to functional expertise, companies can do more to align and drive new phases of supply chain education at all levels. And there is more room for universities to go further in providing more universal supply chain management skill sets.

We hear from more and more companies that they are sending folks to training, but are unsure how to reinforce and internalize the education so it sticks and is used. Leading companies are focusing on post training programs to make sure their people apply the skills learned. Some of these firms line up projects right after the education session so that the skills learned can be employed. The idea is to move from simply “checking the box” on a training objective to truly seeing a business benefit.

Conclusion

Few would argue that acquiring, developing, and retaining the right talent is a critical element in building a world-class supply chain. Finding supply chain talent is a special challenge due to the cross-company, cross- functional challenges that need to be embraced. Therefore, the five key talent characteristics discussed above are even more critical for supply chain executives. A talent plan is clearly an essential part of the strategy to drive supply chain excellence.

Game Changing Trend: Information Hoarding to Information Sharing and Visibility
As we look to the future, there are a number of actions that can help move organizations closer to full adoption of sharing strategic and tactical information with partners/customers to improve supply chain performance. The secret to success is the ability and willingness to collaborate with partners and customers. This is easier said than done when you consider the velocity and volume of data creation and turns (e.g. the continuously changing positions of forecasts, orders, shipments, inventory). This challenge is complicated enough within the traditional enterprise, and is rather daunting in the context of a global supply chain network, with its multiple tiers of partners trying to manage information exchanges across a variety of hardware and software platforms.

The Supply Chain Network as a Social Organism
Consider that a supply chain network is a social organism whose success/value is predicated upon its ability to enable or support collaboration among all participants and stakeholders. Given that today’s global supply chains require reliable access to real-time, cross-network data, high quality information begins with a solid, scalable integration platform that connects all trading partners in the extended network. The form of collaboration needed goes beyond the traditional approach of one-to-one sharing of documents. Rather, organizations will need to achieve 360-degree level visibility based on real-time information across a network that provides a single source of truth.

The accomplishment of this will require one-to-many and many-to-many sharing of data and information. This is where one organization shares with many partners/customers (as necessary) and all those partners/customers share with many extended partners/customers. In essence, this approach enables all relevant participants—within the organization and across the supply chain network—to have access to a shared version of the truth in real time. Additionally, this approach to information sharing provides more than just access to meaningful data; it also provides access to variety of smart people, all working together with timely, accurate data across the global network. The end result will likely be faster, better decisions that can yield improved cost-efficiency, profit, partner relationships, and customer satisfaction.

Integrated Enterprise Solutions Will Be Required

This is not simply an enterprise system-addressable area in the traditional sense. Rather, the abovementioned approach and results will require organizations to focus on integrated enterprise solutions that provide customers with software designed for cross-enterprise planning and execution, and also provide a built-in network of trading partners, and focus less on so-called enterprise solutions designed only for inside the traditional enterprise (i.e. inside their own organizational boundaries). In essence, it is important for organizations that desire reach total adoption of information sharing realize and embrace the idea that this is as much a network issue as it is an enterprise system issue, especially when you consider that the network is the glue that ties trading partners and their systems together to collaborate in manner than can lead to improved performance in the supply chain.

Conclusion: Three Key issues

Finally, here are three other key issues that will need to be addressed in your quest to reach total adoption of information sharing.

Key Issue #1 - Big Data and Key Insights:

Be sure not to get caught in the trap of focusing on and being inundated with Big Data. Set your focus on and never lose sight of the fact that value resides in the insights (transformational information derived from the data) that can be leveraged for improved competitive advantage.

Key Issue #2 - Data Quality:

Determine what constitutes high-quality data by developing specific metrics for measuring quality of the information. May I be so forward so as to suggest that data is only good if it yields good, actionable, insights. As such, the tools you use to store, aggregate, and analyze the data play a vital role in coming to the conclusion as to the quality of your data. Remember all analytics tools are not created equal in their ability to handle certain types of data and their inherit anomalies.

Key Issue #3 - The Breadth of Your Anticipated Supply Chain Network:

Choose solutions that enable or enhance your ability to improve collaboration among members of your anticipated supply chain network. Consider what the breath of your supply chain network (e.g. multi-echelon, domestic, global, multi-party) will look like and recognize that it, in essence, should be a starting point for determining your “new enterprise” (i.e. your new boundaries).

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