Book Excerpt: Next Level Supply Management Excellence

How do you take your supply management organization to the next level? That is the premise of Next Level Supply Management Excellence: Your Straight To The Bottom Line ® Roadmap by Robert A. Rudzki and Robert J. Trent.

The book builds on the lessons offered in the supply management best seller Straight to the Bottom Line ®.That book created the awareness, understanding and the basic framework for moving a supply management organization forward. As the title suggests, this sequel shows supply management executives how to take their organizations to the next level in terms of processes, objectives, asset management, and talent management, including the interaction with other parts of the organization. You can read a Q&A with Robert A. Rudzki about the book on SCMR.com.

While talent management occurs inside and outside the organization, In the following excerpt Rudzki and Trent write about talent management strategies inside your organization.

Every eight seconds, something interesting happens in the United States. A member of the 76-million baby boomer generation turns 65. What this means is that over the next five to ten years, a record number of people will be leaving the workforce—and taking with them years of wisdom and experience that is not easily replaced. And let's not forget that the next generation has 11% fewer members to replace those who are departing. If you are not worried about the impact of that much talent walking out the door, you should be.

To appreciate the impact that departing talent can have on an organization, we only have to look at a major consumer products company located in the Eastern U.S. Its portfolio of products includes some of the best-known products in over-the-counter health care. Its brands are built on an implicit trust with consumers that safety and quality can be taken for granted. Unfortunately, the consumer's trust may have been misplaced. Over the last several years, this unit has suffered quality lapses and product safety problems that have attracted the unwelcome attention of the U.S. government, consumers, and the press.

A number of factors are behind the affairs affecting this company, including a cultural change that stressed output and cost cutting, sometimes at the expense of product quality. While the company did not pursue large-scale layoffs in its quality control unit, over time, its analytic testing laboratory saw its experienced, full-time scientists replaced by lower cost, inexperienced employees and contract workers. Eventually, the Food and Drug Administration issued a report that cited incomplete investigations, poor sampling practices, and inadequate record keeping at the company. The company eventually closed an entire facility for an extended period, costing the company hundreds of millions of dollars of revenue. Having people available for a job is not always the same as having the talent available for a job.

Why Be Concerned with Talent Management?
As highlighted in the opening of this chapter, we can probably conclude that some good reasons exist for wanting to pay attention to talent management. Within the procurement space, we have witnessed a shift from lower-level, tactical purchasing to longer-term, strategic sourcing and supplier management. The need to better manage the level of talent within the supply organization has never been greater. Consider, however, some recent statements from supply executives about how they perceive their procurement organization:

• I don't think the people we have in purchasing currently have the ability to be strategic
• We see a lot of order entry—not buying
• We are after best price, best price, best price
• There is no process for strategic sourcing
• We are running on expired contracts
• Everybody is a function within their own silo
• We can't afford to continue paying professionals to perform clerical work such as order processing
• There's no accountability because there is no visibility

An increasing body of research is emerging that links talent management practices with a powerful set of performance results. One study, for example, found that the leadership quality of employees accounted for as much as 45% of organizational performance. In supply management, this figure could be even higher given the knowledge, rather than manual, requirements of the discipline. A review of studies conducted throughout the 1990s reveals a strong correlation between the quality of human resource management systems and practices and some important organizational measures, including employee turnover, sales per employee, and market value. Within supply management, make procurement a desired position, and it will raise the caliber of the outcome.

Here we present some specific reasons why talent management must be emphasized within procurement and supply. These reasons include a wider skill set that supply management requires, demographic changes leading to the loss of deep smarts, and the expanding role of supply management involvement into new areas. Even if these reasons are immaterial, the simple fact remains that supply management is a knowledge business that requires smart individuals. That alone makes talent management a concern.

Wider Scope of Supply Management
Depending on how detailed we become, we could identify hundreds of areas that could conceivably be part of the supply management knowledge and skill set. One thing we know for certain is the knowledge and skills that support a strategic supply perspective are vastly different than those that support a traditional or tactical perspective. This makes talent management that much more important.

Consider the knowledge required to manage costs. A strategic supply model requires an understanding not only of price management but also of cost management. Price analysis refers to the process of comparing one price against another, against external price benchmarks, or against other available information without in-depth knowledge about underlying costs. Cost analytic techniques focus primarily on the cost elements (labor, materials, overhead, etc.) and drivers that are aggregated to create a price. Extending this further, supply managers must understand any factors that affect total cost. They must also understand any pricing strategies that suppliers are using, such as price skimming, cost-plus pricing, or market penetration. By better managing and reducing the cost elements, drivers, and external factors that make up a price and eventually a total cost, a supply organization should see lower purchase prices compared with prices where cost management did not occur. Cost management is exponentially more complex than price management. We could write an entire book on cost management techniques.

Besides cost management, other knowledge and skill areas where supply organizations should retain a competency include an ability to understand how to develop strategies that support a firm's competitive business model. This means that supply managers must have the ability to understand that model. Supply personnel must also be able to take a holistic or integrated view of the business, which means they understand how the different elements of a value chain combine to create value.

A strong knowledge of process rather than functional management is also required. Because processes create the output that creates value, supply managers must be able to visualize those value-creating processes, articulate their objectives, and understand their role within a process. And without question, having personnel with an ability to manage critical supplier relationships will become even more important in the future. An understanding of electronic business systems, the ability to perform statistical analyses and make fact based decisions, and the ability to seamlessly work across boundaries are also part of today's supply management knowledge and skill set. Boundary crossing refers to working across functional boundaries, enterprise boundaries, geographic boundaries, and cultural boundaries. Expanding scope makes talent management an important part of the supply management process.

Demographic Changes and the Loss of Deep Smarts
Any growth in the U.S. population over the next 15 years is expected to occur primarily through immigration, making the need to manage a culturally diverse workforce a key part of the talent management process. Furthermore, the percentage of males relative to females in U.S. colleges has been decreasing, further changing the complexion of the supply management profession.

An issue that will confront nearly all developed countries over the next 10 to 15 years involves an aging population in developed countries. The period of the most rapid growth in the ratio of seniors (age 65 and older) to the working-age population will occur in the 2010s and 2020s, creating strains on benefits programs and retirement systems. This mass migration out of the workforce also highlights the degree to which talent will exit the workforce. In 2010, there was one senior for every four working-age people in the developed world. By 2025, this ratio is projected to be one to three.

As the opening to this chapter suggested, the loss of experienced talent, whether through retirement or cost cutting, should be a concern. And this concern relates to something called deep smarts. Deep smarts represent experienced-based wisdom, and when the deep smarts walk out the door, the wisdom IQ of an entire organization falls. In their book Deep Smarts, Dorothy Leonard and Walter Swap write:

Throughout your organization are people whose intuition, judgment, and knowledge, both explicit and tacit, are stored in their heads and—depending on the task—in their hands. Their knowledge is essential. They are, relative to others, expert. These are the people with Deep Smarts, and it is not an exaggeration to say that they form the basis of your organizational viability.

Deep Smarts address a special form of experience-based expertise that is critical for managers to understand and appreciate—for their own benefit as well as that of their organizations. Deep Smarts are a potent form of expertise based on first-hand life experiences, providing insights drawn from tacit knowledge, and shaped by beliefs and social forces.

Deep Smarts are as close as we get to wisdom. They are based on knowhow more than know-what. It involves the ability to comprehend complex, interactive relationships and make swift, expert decisions based on that system level comprehension but also the ability, when necessary, to dive into component parts of that system and understand the details. Deep Smarts cannot be attained through formal education alone—but they can be deliberately nourished and grown and, with dedication, transferred or recreated.

Although the sheer amount of practice and experience is not a powerful predictor of expertise, the combination of an extended period of concentrated effort coupled with self-reflection has been shown to build expertise in a wide variety of domains. Most evidence suggests that it takes at least ten years of concentrated study and practice to become experts as opposed to being merely competent.

The issue here is not whether there are people to replace those who are departing. Your organization will always receive applications, sometimes hundreds, for open positions. The issue is the loss of institutional knowledge that might never return. Perhaps the lesson here is to respect our elders, particularly since demographic changes reveal they are heading for the door.

The Expanding Domain of Supply Management
The reality today is that supply organizations are involved (or should be involved) with just about every important purchase that a company makes. And when purchases are too small to involve supply personnel directly, the supply organization should be responsible for developing the systems that allow internal users to obtain what they need. This can include establishing blanket purchase orders, providing procurement cards, and setting up online ordering systems.

Instead of sourcing only direct materials, today's supply organization is involved with buying indirect items, services of all kinds, and capital equipment and structures. Instead of simply buying components, supply managers are responsible for sourcing assemblies, systems, and even finished goods. In addition, let's not forget the role that supply managers provide as they support the activities of other groups, including marketing, engineering (especially during new product development), finance, and operations. The expanding involvement of supply personnel demands personnel who do more than buy direct items from the comfort of their office.

We could list other reasons for the growing importance of talent management within supply management. The ones discussed here, however, give us a good idea about the important relationship between talent management and supply management success. The bottom line is that procurement and supply management require the best people available. It is not a production environment with automated equipment and robots.

In the final analysis, the primary reason for pursuing talent management is to make a significant contribution to the bottom line. Performed correctly, talent management enables a supply organization to maximize its impact by maximizing its talent. Talent management is all about:

• Assigning the right people with the right skill set to the right positions
• Knowing the difference between strategic and tactical responsibilities
• Recognizing the differences between skills and competencies
• Understanding how to maximize the advantage that comes with deep smarts
• Providing the opportunity for people to succeed
• Making procurement a desirable career choice
• Realizing the value of procurement
• Achieving the next level of supply management excellence

Professional Assessment and Development
For decades, organizations have attempted to identify the kinds of knowledge, skills, and competencies required to perform at superior levels. A major focus of most talent management efforts has been to identify the kinds of skills, knowledge, and competencies required to perform a certain task or job and to develop a plan to mitigate any weaknesses. At times, competency assessments are specific, which is often the case within supply and supply chain management. We may want to evaluate, for example, an individual's knowledge of contract law or familiarity with analytic cost management techniques. At other times, assessments evaluate more generic areas, such as communication skills, problem solving abilities, and conflict management skills that apply to nearly any organizational setting. The bottom line is that assessment is not a new phenomenon.

Defining Knowledge, Skills, and Competencies
Knowledge, skill, and competency assessment has a role in each part of the talent management process. So, what do we mean by these terms? Knowledge relates to knowing something with familiarity gained through experience, learning, or association. We often speak of a body of knowledge as it relates to different professional areas. Obviously, we expect supply professionals to master a body of knowledge, which is often evidenced through academic degrees and professional certifications (discussed later). Anyone who has ever attended school (which is practically everyone in the developed world) has had assessments of his or her knowledge conducted on a regular and sometimes painful basis. This assessment consists of exams and grades.

Skills represent the ability to use one's knowledge effectively and readily during the execution of performance. For example, most of us had to take a road test (nervously) with a state examiner sitting in the passenger seat. The road test demanded performance through the effective use of our knowledge of road safety and driving. It is important to recognize that two broad types of skills exist. Basic skills, the first type, typically are acquired by workers prior to entering the labor force. They consist of literacy, problem-solving, numerical reasoning, and written communication. The second type includes occupational or job-related skills required by employees to perform a specific job or function.

Taking this discussion to a higher level, competencies involve a measurable pattern of behavior and knowledge that cause or predict superior performance in a given role or set of defined responsibilities. They allow us to solve problems by developing solutions that prevent their recurrence with a minimum utilization of energy12. Like skills, we can divide competencies into two broad categories—business and functional competencies. Business competencies, which are essential for individuals who expect to move into executive management, involve the recognition of business requirements and, when needed, proactive application of correct business practices. Functional competencies involve the understanding of technical systems, processes, and principles and how they influence company functions, products, or strategy.

Gap Analysis
Assessment, formally and informally, can occur that addresses the knowledge, skills, and competencies required of individuals, departments, and even entire organizations. Exams, job-performance reviews, professional certification tests, and self-administered or third-party assessments are all part of the process of evaluating strengths and weaknesses against predetermined criteria. It is not enough for an assessment to reveal strengths or weaknesses. This information, which is the beginning of the improvement process, forms the foundation for building an action plan for further development. The development of personal goals and plans should be an integral part of the assessment process.

Gap analysis must be a large part of any assessment process. A gap is the distance between where we want or need to be in terms of performance compared with where we actually operate. Where an individual operates is the output from the assessment process. Gap analysis has two primary objectives. The first is to identify and rank those areas with the most critical gaps. The second objective is to develop plans that will help close the performance gap.

The knowledge, skills, and competencies that an individual requires often differ from position to position, industry to industry, and across organizational levels. Within supply management, these competencies may also divide along tactical and strategic levels. Something we know is that no standard or agreed upon set of knowledge, skills, and competencies exist within supply management. Ask 10 people for their listing of the knowledge and skills required for successful supply management, and the chances are good that 10 different lists will emerge. In reality, we have yet to see any consensus about the knowledge and skill set that comprises procurement and supply management.

Assessing Strengths rather than Weaknesses
Most assessments focus on improving an individual's weaknesses. A different approach is called StrengthsFinder, which, through an online assessment that relies on something called strengths psychology, identifies an individual's 5 top strengths out of 34 potential strengths. This approach includes strengths that are not specific to any one functional group or organizational area. The strengths are more generic than specific. Samples of some of the strengths assessed include achiever, analytical, strategic, futuristic, and learner.

The logic behind this approach is that superior performance, even greatness, comes from building on strengths rather than on those areas where an individual is inherently weak. Instead of investing time and resources trying to change weaknesses (which might result in only a marginal payback), this approach argues that time and energy are best spent on those areas that offer the greatest payback. A person who struggles with numbers, for example, is unlikely to become a great accountant or statistician, no matter how hard he or she tries.

As the author of StrengthsFinder states, “Even the legendary Michael Jordan, who embodied the power of raw talent on a basketball court, could not become the ‘Michael Jordan' of golf or basketball, no matter how hard he tried13.” The point here is to maximize your strengths while managing your weaknesses.

Once an individual completes the strengths assessment, he or she receives a Strengths Discovery and Action-Planning Guide that includes the top five strengths report; 50 Ideas for Action tailored to your individual strengths based on thousands of best-practices; a Strengths Discovery Interview that helps an individual think about how his or her experience, skills, and knowledge can help further build strengths; and a Strengths-Based Action Plan for setting specific goals for growing and applying personal strengths in the next week, month, and year.

At the organizational level, we see a focus on strengths while managing weaknesses all the time. It is common today for organizations to stress internally their core capabilities while managing through outsourcing those areas where they offer nothing unique. The same logic applies as individuals grow their strengths while taking steps to manage their weaknesses, such as attaining a basic level of competency in weak areas.

Professional Certifications
Various professional associations have developed bodies of knowledge and self-assessments for use by their members. Within the supply chain space, for example, APICS has developed the operations management body of knowledge (OMBOK). The purpose of the OMBOK is to outline the areas of knowledge required to successfully manage the processes for producing and delivering products and services14. It is also the most developed of the bodies of knowledge within supply and supply chain management. For that reason, it is mentioned here.

Organizations use resources like OMBOK to identify the kinds of knowledge their operations and supply chain professionals should possess. While originally developed for manufacturing companies, OMBOK also identifies the specific knowledge areas that apply within the distribution, health care, retail, utility, and hospitality industries. It also identifies the knowledge areas that are applicable to the most common supply chain and supply management job titles. APICS groups its body of knowledge into the following categories:

• Strategy
• Supply Chain
• Processes
• Planning and Control
• Scheduling
• Project Management
• Advanced Manufacturing and Service Technology
• Emerging Operations Technologies

APICS also awards two professional certifications that reflect the mastery of a body of knowledge—an individual can earn the designation certified in production and inventory management (CPIM) and the designation certified supply chain professional.

The Institute for Supply Management (ISM) also offers professional certifications. These include the certified professional in supply management (CPSM), the certified purchasing manager (CPM), and the accredited purchasing practitioner (APP). Professional certifications are evidence that an individual has mastered a professional body of knowledge.

These certifications, like all professional certifications, require exams that represent a body of knowledge. The CPSM certification, for example, requires an individual to take three exams. The first exam, foundation of supply management, includes contracting and negotiations, cost and finance, international, social responsibility, sourcing, and supplier relationship management. The second exam, effective supply management performance, includes forecasting, logistics, materials and inventory management, organization and department assessment, planning, product development, project management, and quality. The third exam, leadership in supply management, includes leadership, risk and compliance, and strategic sourcing. These exams provide some insight into what makes up the body of knowledge within supply management.

Next level supply organizations understand the importance of employee assessment within the talent management process. While some organizations develop their own assessments of knowledge and skills, others rely on third parties to administer assessments and interpret their findings. If done effectively, assessment with development plans and goals should lead to better organizational performance. If done poorly, organizational consultants are guaranteed future business.

Next Level Talent Acquisition Strategies
A study by Deloitte involving nearly 1400 human resource practitioners from over 60 countries revealed that the ability to attract new talent and the ability to retain human talent were perceived as the two most critical human management issues facing organizations. Different ways exist for gaining access to the human resources required for next level supply management. The purpose of each approach is to gain access to personnel and leaders that are the source of future procurement and supply leaders.

Develop Closer Relationship with a Select Group of Colleges
Similar to suppliers of direct materials, progressive companies develop close relationships with a select group of colleges and universities. These companies extensively recruit interns, co-op students, and recent college graduates from these institutions. A host of benefits may be available through close industry-university relationships. In fact, recruiting companies may even receive preferential customer treatment. Is any supply organization against preferential treatment?

At the university where an author of this book is employed, companies that have a close relationship with the undergraduate supply chain management program can expect certain recruiting advantages that are not available to every company. Companies that treat the university as a preferred supplier can expect treatment as a preferred customer. This includes:

• A personal introduction to the head of career services at the university
• Interview meeting space in a private conference room instead of a common student interview area
• Access to students in other majors to broaden the pool of qualified candidates
• Early access to the supply chain management resume book
• Counseling and timeline guidance on university recruiting strategies and milestones
• Rapid transmittal of internship and job opportunities to potential students through an electronic mailing list
• Special help with the administrative aspects of posting job opportunities and attending the university career fair
• Special meet and greet information sessions sponsored by the supply chain management club
• An opportunity to have students work on projects that benefit the sponsoring company directly
• Introductions to the appropriate staff in the graduate program

Based on extensive experience, those companies that have developed a special relationship with the university more often than not are successful in recruiting the better students from the talent pool.

Recruit Management Consultants
Another option for acquiring supply management talent involves hiring consultants who are leaving the consulting industry. Again, based on personal experience, consulting firms hire some exceptional people who take on demanding supply management projects for their clients. This is especially true at the top-tier consulting firms. While at first glance, the consulting profession may appear glamorous, after several years, the travel and hours associated with consulting projects begins to take a toll, particularly if the consultant has a family. At that point, these talented individuals often begin to search for a different career option. Next level supply organizations will readily tap into the recruiting pipeline that features consultants who are exiting the profession.

Recruit External Talent
Like many professional sports teams, some companies go to the marketplace and buy the talent they need. This approach requires a willingness to make attractive offers that will entice supply leaders to join a company. It may make sense to team up with a first-rate executive search firm to coordinate recruiting efforts if this is a preferred option for obtaining supply management talent.

Recruit from Other Functional Groups
Supply organizations often recruit talent from other functional groups for a variety of reasons. First, purchasing has evolved into supply management, an evolution that clearly benefits from personnel with a broad range of knowledge and skills. Second, the talent pipeline within purchasing is sparse at many companies, forcing supply leaders to recruit from outside the purchasing domain. Finally, supply management has become an attractive career option that appeals to professionals from other functional groups.

It is increasingly common to see individuals with engineering or finance backgrounds working in supply management. At many companies, supply management is now viewed as a promising career path offering exciting opportunities. A word of caution is in order here. When recruiting from other functional groups, it is important to not be perceived as stealing talent from other internal groups, particularly when those groups are needed to support various supply management objectives.

Recruit Honorably Discharged Military Personnel
Companies such as Boeing, Raytheon, Air Products, and General Electric regularly tap into a talent pipeline that provides access to highly skilled and highly motivated individuals. This pipeline includes enlisted personnel and officers who are honorably discharged from the military. Airlines have known for years that the military is a primary source for highly experienced pilots. Why would other job classifications be different? Besides receiving training that is highly sophisticated, these individuals have usually worked under demanding conditions that require a high degree of teamwork. This is a talent pipeline that supply organizations should pursue more aggressively.

Next Level Talent Retention and Development Strategies
All the talent acquisition efforts in the world are diminished if a supply organization experiences high turnover. While talent acquisition is important, the talent management process does not stop at that point. The emphasis must shift from acquiring human resource talent to retaining and developing that talent. An appropriate comparison involves supplier selection. Few supply leaders would argue that selection represents the end of the supplier management process. Once a supplier is selected, the emphasis should shift to management and development. Employees are much the same way. The following offers some approaches that next level supply organizations will rely on to retain and develop their supply personnel.

Team Leadership Assignments
Extensive experience with supply management work teams has convinced us that team leadership assignments offer an ideal training ground for developing future supply leaders. Besides the challenge of managing people from different functional disciplines and often different geographic locations and cultures, the team leadership role is one of the most demanding today; teams are an integral part of the supply management process whose use is increasing rather than decreasing. A baseball analogy is appropriate here. In some respects, team leadership roles are like a minor league assignment before being called to the major league. Effective team leaders are prime candidates for future supply leadership positions.

Mentoring Programs
Many companies have created mentoring programs to develop their promising supply leaders. With these programs, a senior supply leader works directly with junior personnel to provide guidance and to share knowledge and experience. The mentors meet with the junior personnel on a regular basis, introduce him or her to other executives, and include these individuals in any experiences that would further develop their leadership ability, such as participating in buyer-supplier executive meetings.

Not all mentoring occurs at the executive level. Given the importance of teams, it makes sense for team leaders to mentor team members who will eventually assume formal leadership roles. It also makes sense to assign a mentor to new college hires. This approach assumes the mentors are qualified to assume that role and will be diligent in their responsibilities. Various research studies have found that mentoring programs have not consistently resulted in the development or advancement of those being mentored. Mentoring is another one of those activities that must lead to accomplishment.

Knowledge Transfer Programs
One increasingly popular method to deal with the ongoing need for talent development is to work with advisory firms who specialize in providing subject matter experts (SMEs) or deep smarts. These deep-experienced advisors are literally engaged for the purpose of transferring their extensive, relevant knowledge to the client's teams. This is a fundamentally different approach than a conventional consulting model; they can be characterized by flexible arrangements including providing coaching and advice on an as-needed basis. Knowledge transfer programs are often used to supplement other professional development initiatives.

Job Rotational Programs for High Potential Hires
Rotational programs involve assigning promising new employees to work in different areas over a period of a year or two. Progressive firms identify their most promising recruits, often during the college recruiting process, and then place them in a job rotational program. At the end of the development program, these individuals have a solid understanding regarding how the supply organization works, not to mention a knowledge base that often far exceeds employees who were not part of a rotational program. These individuals are also highly visible as they move through their job assignments.

Although these programs are expensive to operate, their use is considered a best practice for developing future leaders. An analysis by Businessweek revealed that over 30 of the top 50 companies rated as the best places for college graduates to work offer formal management training programs. These programs satisfy a variety of objectives, including exposing the employee to many areas of a business while enhancing their knowledge and skill base. Some of these programs feature international assignments.

Leadership Development Programs
An American Management Association commissioned study found a significant relationship between the presence of leadership development programs and improved market performance17. Leadership development involves a broad category of activities with the specific objective of developing leadership capabilities. General Mills, for example, conducts a program called Building Great Leaders. As part of this program, groups of the company's 500 top managers sit down individually with human resource managers to review the results of 360-degree feedback and two personality assessments. These managers also attend a session conducted by a senior vice president that addresses leadership issues.

The percentage of companies that have developed formal leadership programs is hard to determine because these programs come in all shapes and sizes. Those that develop these programs usually focus on the knowledge and skills they think managers will need as they progress through their careers. With that said, some companies have experienced a disappointing attrition rate after employees complete a leadership development program, certainly an unintended consequence by anyone's measure. Oftentimes younger managers, whose higher potential was a major factor in being selected for a development program in the first place, find they are quite marketable after their program is complete. Talented employees just became even more talented.
A Pennsylvania company found that over half of the managers who completed its advanced management program left the company within a year or two of program completion. This rate is much higher than the rate for managers who have not participated in the program. The leadership development program may actually be counter-productive.

Continuous Training Courses
As companies shift toward strategic supply management, they nearly always find they need to retool their workforce. More often than not, this retooling takes the form of continuous training programs. Rest assured from earlier in the chapter that the knowledge and skills required for tactical procurement are not the same as those required for strategic supply management. If you are looking for an apple to orange comparison, tactical versus strategic is probably it. This is not to say that tactical competencies are unimportant. They are simply different than what is required to support a strategic perspective. World-class supply management encompasses both strategic and tactical competencies.

Another approach for developing the workforce includes offering shorter courses that relate to supply management. These courses, which can be developed internally or by third parties, usually cover topics such as quality management, lean thinking, team building, and negotiation. Most companies develop a generic menu of courses and then offer them to employees on a regular basis. Best practice companies carefully assess the knowledge and skill needs of their future supply leaders and then craft training programs that are customized to that employee's unique developmental needs. An employee who is assuming the role of a commodity team leader, for example, might benefit from team leadership and negotiation training. Another employee who is being assigned to a supplier development team would likely benefit from lean supply or six sigma quality training. Ideally, these training modules are available for on-demand viewing asynchronously through web-based systems.

Personnel Skill Advancement Rewards
Another development approach focuses on rewarding personnel for advancing their skills and knowledge through formal education. This includes earning degrees or certificates in supply management, which were discussed earlier. Each year the ISM publishes a listing of colleges and universities that offer degree and certificate programs related to procurement and supply management. Even many colleges and universities that do not have formal supply programs offer courses related to supply management. Supporting continuing education through tuition reimbursement will further encourage the development of your company's human resource capabilities.

Career Ladders
Progressive companies provide some perspective of the path that supply professionals might follow as they progress through their careers. These perspectives, called career ladders, are valuable when recruiting new talent into the supply organization. Employees usually appreciate a graphical representation of how their careers might advance.

Career ladders are important because most organizations have de-layered the number of levels they maintain from the top to the bottom of the organization. In an earlier era, younger professionals could easily see their career progression through well-defined steps. These levels have given way to broader groupings of positions within a band rather than discrete steps. Career moves that were previously vertical, which meant a promotion, now often appear as lateral or horizontal moves. As a result, career ladders are an important tool for retaining talent within the supply organization as they help employees visualize their growth.

Talent Analytics
A body of knowledge is emerging about something called talent analytics and how organizations use analytic data to support their talent management processes. Talent analytics, which represent the state of the art in talent management, involves adopting sophisticated methods of analyzing employee data to ensure the highest productivity, engagement, and retention of top talent. Six kinds of detailed statistical analytics help companies answer important human talent questions. While some of the analytics are more likely to be applied with direct labor, for example, taken as a whole, they support the overall objective of better managing a labor pool. These six analytic approaches include:

1. Talent supply chain analytics address how workforce needs should adapt to changes in the business environment.
2. Talent value model analytics analyze why employees choose to stay with or leave an organization.
3. Workforce forecasts analytics help identify when to increase or reduce staffing levels.
4. Human-capital analysis analytics provide insight into which actions have the greatest impact on the workforce and the business.
5. Analytical human resources help identify which departments or individuals need attention.
6. Human-capital facts analytics help identify the key human-related indicators that link to organizational performance.

Talent analytics explicitly recognizes the link between applying the right data and tools to human processes and enhanced corporate performance. Employees are a rich source of collective data that managers can use to make better human resource decisions.

Concluding Thoughts
Every corporate group has a need for an active talent management process. In that regard, much of what we discussed applies to other functional areas. Simply change the phrase procurement or supply management to any organizational group. One thing is certain, however. Strategic supply management involves knowledge areas that require leaders with intelligence and foresight. It is not something we can automate.

Why do some companies commit to building organizational capabilities in supply management, year after year, while others do not? Based on our experience, there is a straightforward link between executive awareness of the value of strategic supply management and top management's willingness to invest in supply management capabilities, including human capabilities. The road to success in achieving an organizational commitment to all aspects of talent management starts with creating executive awareness across a number of areas:

• Awareness of the current state of supply management practices at your company compared with supply management best practices
• Awareness of the opportunity possible by transforming the current state into something closer to world-class practices and capabilities
• Awareness of how to create a comprehensive roadmap for transformation that involves the right internal and external human resources

As discussed elsewhere this is not easy to do. But, if done well, it will help create the foundation for next level supply management.

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You can read the most recent contributions to Supply Chain Management Review by Rudzki and Trent by clicking on their names.

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