Skills and Competencies That Supply Chain Professionals Will Need
Supply chain executives still need to be experts at managing supply chain functions such as transportation, warehousing, inventory management, and production planning
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Editor’s note: This is the fourth and final installment of a series authored by University of Tennessee professors.
Ten 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.
Today, the Need Goes Well Beyond Functional Expertise.
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 within the firm 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 necessary executive to coordinate the end-to-end supply chain process, even though he or she does not control it all. The battle for top supply chain talent must be focused on acquiring people with process expertise, not simply functional competence. The mental shift to supply chain-as-a-process leads inevitably to the shift of the role of the supply chain executive from a functional focus to process focused, and to supply chain leadership becoming part of the executive team.
Supply Chain Leadership as Part of the Executive Team
In a growing but still small 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 Critical Characteristics 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, CEOs must know the blueprint for the “dream” supply chain leader. These characteristics can be grouped into five key qualities:
• Global orientation
• Systems thinking
• Inspiring and influential leadership
• Technical savvy
• Superior business skills
Supply chain executives don’t have a monopoly on these characteristics. Any senior executive must possess the same skills. But there are some unique needs in the supply chain area that arguably make them even more essential.
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 so. Therefore, supply chain executives must manage, like never before, an enterprise that extends across continents and must deal effectively with suppliers and customers worldwide.
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 supply chain as a system. The supply chain executive must also comprehend the connections and interdependencies across procurement, logistics, manufacturing, and marketing/sales. In addition, he or she must absorb the complexity of interfaces with suppliers and customers outside of the firm.
Inspiring and Influential Leadership
A small but 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 supply chain function across the organization. They must be able to build teams and manage people, and must be able to 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.
The supply chain chief need not be credentialed in IT systems, but he or she must have a close working relationship with the CIO and ideally have no shortage of IT-savvy specialists on staff. He or she should have dealt with the challenges of technology selection, implementation and application, and be alert to the next-generation of technology tools, as well as being wise to the implementation challenges inherent in the complexity of today’s supply chain software solutions.
Superior Business Skills
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 economic profit 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.
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.
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 and economic profit.
About the AuthorJ Paul Dittmann Dr. J. Paul Dittmann is the director of the College of Business Administration Office of Corporate Partnership at the University of Tennessee, Knoxville. He joined the university after a 30-year career in industry. He has published and spoken at numerous public seminars and conferences in the areas of lean manufacturing, global business, and supply chain excellence and is the co-author of The New Supply Chain Agenda. At the University of Tennessee, he is managing director of the Demand-Supply Integration Forums and teaches supply chain and logistics courses at the undergraduate and executive education levels. He can be reached at [email protected]
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