Is Your Supply Chain Talent Up to the Challenge?

By Gary Forger
Senior Vice President, Professional Development
Material Handling Industry of America

It wasn’t all that long ago that Mexico was considered to be a low-cost labor pool. Then all of a sudden, China happened. And for some time, few companies opted to manufacture in Mexico rather than China.

That seemed fairly straightforward until a barrel of oil crashed through the $100 barrier and just kept moving higher. Meanwhile, labor costs in China have continued to increase. And in no time at all, various companies supplying North American consumers are looking at the tradeoffs between the cost of labor and moving finished goods from point of manufacture to point of consumption. Suddenly, Mexico is back in the picture.

Worse yet, labor and energy costs are only two key factors affecting supply chain decisions today. Quality, ease of replenishment, order fulfillment lag time, competition and pricing, to name just a few factors, all figure into the equation.

All of which raises a very good question – Is your supply chain talent up to the challenge?

In fact, Procter & Gamble, Intel, IBM, Boeing and other members of the Supply Chain Council asked that question late last year. The outcome was a comprehensive study for the Council by AMR Research Inc. to assess the state of supply chain talent.

AMR talked to nearly 200 companies across 15 industries, predominantly in the U.S. Three quarters of the respondents were at the director level or higher.
The intent was “to assess the state of the supply chain management discipline, identify key requirements to support a demand-driven curriculum, and construct the first functional talent attribute model, which will serve to align industry and academia in generating standardized and more universal supply chain programs.”

According to the report’s authors, David Aquino and Lucie Draper, the survey yielded five clear conclusions:

• No two supply chains are alike
• Leaders view supply chain management as a business discipline
• Globalization has created urgency
• A common supply chain talent model is the foundation for improvement
• Universities have an opportunity to take a leadership role.

Addressing the first two points, the report, “Supply Chain Talent: State of the Discipline,” points out that the scope of responsibility for the supply chain varies company to company. There’s not much agreement about what exactly is supply chain management and where it does or does not intersect with logistics. In fact, AMR found that of the 198 companies participating in the study, there were 122 different spans of control for supply chain management programs. And it’s worth noting that the words “material handling” are not even part of the conversation.

As a result, “developing a supply chain management organization is an exercise in complexity, confusion, and frustration,” says the report. Furthermore, that extends to the inability of many supply chain management professionals to get senior management’s attention.

However, AMR reports that the best-run companies view supply chain management as a business discipline that can increase revenue and profit.
Unfortunately for those companies that don’t take that approach, a reliance on legacy skills gets in the way. Traditionally, logistics and engineering skills have been prized. So many companies have “an inherent predisposition to hire those same skills,” says the report.

The outcome is that supply chain management at these companies resides in established territories and typically excludes manufacturing and new product development and launch (NPDL). When asked if NPDL was, in fact, a part of supply chain management, “leading supply chain organizations laughed at the question.” In a word, competitiveness was the reason as product cycles continuously shrink.

As to globalization, the report says “Our research shows organizations tending to increase the level of centralization within their respective supply chains. Centralization is being guided by leaders that understand effectively supporting global, complex organizations requires a balance of more centralized supply chain strategy coupled with local execution.”

But companies are not the sole source of talent development. “The magnitude of growth and importance derived from globalization will create disproportionate risk if there is not a concerted effort by industry consortia and academia to build scalable supply chain management programs.”

Leading organizations are actively working with universities in China, Brazil and other countries to develop curricula that will support their local supply chain management needs. These efforts are far ranging, including skill sets such as language, technology and manufacturing techniques.

Looking at the training big picture, the greatest need, says the report, is for supply chain generalists who can then become specialized as needed.

And while that is the greatest need today, the sands are shifting. In fact it is best for both companies and academia, says AMR, to acknowledge the growing complexity of the supply chain and the interdependencies of its various skill sets.

To address this shift, AMR divided supply chain responsibilities into 11 talent stations:

Respondents to the survey were asked to rate various skill sets within each of the stations. AMR calls this the AMR Research Supply Chain Talent Attribute Model. The graphic on this page details their ratings.

Just as important, the chart is a starting point for discussions between companies and academia to develop a more unified supply chain curriculum for the future. AMR evaluated skills needs this way:

• Plan, deliver, and source functions are mature, so industry needs more people with advanced skills
• Make, post-sales support and governance are in dire need of people with basic skills, but recruits are deficient
• Customer management, strategy and change management, and technology enablement require advanced skills, but there are few recruits with these capabilities.

The challenge going forward will be for industry and academia alike to integrate training in the various stations rather than treating each as a silo.

In answer to the question at the start of this article, AMR answered it best when it said this in the report. “Leaders across industries would like to see candidates trained by universities that are better able to ‘connect the dots,’ ‘acquire the leadership skills’ that will facilitate the burgeoning global and virtual management world, and ‘balance specific IT skills with business acumen’.”

Learn more about this subject by attending the ProMat Keynote: Building the Workforce of the Future on January 13, 2009 in Chicago.

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