Once upon a time, the phrase “managing a supply chain” meant making sure that your warehouse was adequately stocked and that nobody was goofing off in the back. Times have definitely changed. Today, to manage a supply chain means to be part of a complex and rapidly evolving global economy. Technology, escalating standards and changing models of business, as well as entirely new industries have transformed the supply chain landscape forever (nobody even knows whether to call it “supply chain management” or “logistics” – how’s that for complex?).
As a result, today’s supply chain manager owes his success or failure purely to the possession or lack of certain key skills. This article describes what these skills are, how you can acquire them, and how they can make you a more effective supply chain manager.
In many ways, the most beneficial skill today’s supply chain management professional can have is dealing with people. In the past, there was a tendency for host companies to view themselves as isolated entities, separated from the rest of the supply chain process.
Partners, such as distributors and other suppliers were seen as just “cogs in the wheel”, whose purpose was to assist the host company in accomplishing its financial goals. And for a while, this worked.
Today, however, to engage in that level of isolation would be to indulge in a potentially financially fatal illusion about the realities of the marketplace. With the advent of globalization, and thusly, global supply chain management, individual companies are more connected than ever before. In business circles, “I” has been replaced by “we”, and the company that continues to indulge in “I” thinking gets left in the dust.
A corollary of this interconnectedness is that today’s supply chain manager must have an exceptional aptitude for dealing with people, both within his company and along the rest of the chain. These people skills encompass many different attributes, but mostly fall under the umbrella concepts of personal leadership and relationship-building.
In a world where most people are overwhelmed with information, simply being seen as a source of guidance and certainty inspires trust in others. Proactively recruiting others to work together towards a common goal is another aspect of personal leadership.
In leadership studies, two types of leaders have been identified. The transformational leader is driven by a compelling vision of future prosperity, and encourages others to become a part of this vision. He demonstrates his belief in this vision by leading by example. Furthermore, he encourages others to question established ways of doing things, so that new, mutually beneficial solutions may be achieved.
On the other hand, the transactional leader leads others by carrot-and-and stick enticements. He emphasizes to subordinates or associates what the potential rewards and punishments will be for following or not following a given course of action. In moving others to provide more effective supply chain services, both leadership approaches will be helpful to you at different times.
Obviously, the transformational leader’s style of challenging the status quo can be beneficial in getting people to move from old, outdated modes of doing business to more current ones.
At the same time, challenging the status quo just for the sake of challenging the status quo can be detrimental. But on the other hand, transactional leader style reward and punishment motivation is only effective so long as the rewarder/punisher is around. Time and experience will show you which of these approaches works best to synergistically move you towards your objectives.
The other aspect of effective people skills is relationship-building. While related to the qualities of personal leadership mentioned above, relationship building functions with the goal of establishing a trusting long-term partnership in which both parties realize the value of supply chain collaboration.
Consider the following scenario: You discover through analysis that overhauling your existing software infrastructure with a superior, but more expensive supply chain management software solution could actually drastically improve product tracking capabilities and speed up product cycles, resulting in increased customer satisfaction and profits.
Now suppose that in order for this software solution to make these benefits possible, it needs to be installed throughout the entire supply chain, from management to delivery levels. Your task then becomes to convince not only your staff, but your partners to adopt this software.
In a situation like this, the collateral trust built up over years may very well be the deciding factor in whether your partners are willing to make the necessary changes to realize these benefits.
Supply chain analysis is the process of using a technological means to minimize the supply chain process, as measured from manufacturer to consumer. Minimizing this process can also reduce much of the demand uncertainty that arises in the supply chain process. This reduction in uncertainty becomes possible because a shorter supply cycle is generally an indicator of greater customer demand.
An effective supply chain manager understands how to make use of the data available in order to determine how long each part of the supply chain takes to accomplish its function. Once this information has been established, the next step is to determine the variables that come into play to effect this processing time.
The ultimate goal of this analysis is to determine where various factors are interfering with productivity, and recommend appropriate changes. These changes could range from revising product packaging to modifying habits in the distribution network.
The next skill that a supply chain manager needs to have is the ability to implement information technology systems. Technology enables businesses in a supply chain to communicate faster and more effectively. Most of these technologies involve the use of the internet to allow for an exchange of relevant information between partners. As such, this technology benefits all partners involved by integrating data from various points in the supply chain, lowering supply chain costs, reducing paper usage (which saves both time and money), reducing data errors, and improving customer satisfaction by allowing greater product and delivery customization and shorter cycle times.
Two information technology solutions that are popular among supply chain and logistics managers are supply chain management (SCM) software and enterprise resource planning (ERP) software. Both of these software solutions are used in supply chain management, and while there are similarities between the two, there are also some important differences.
A supply chain management software solution is one that is designed to automate either the planning aspects of managing the supply chain, the logistics aspects, or both.
The planning aspects of managing a supply chain include: Identifying the most effective transportation means to ship and deliver the product; Analyzing the supply chain in order to identify and eliminate any process bottlenecks; Establishing production means and scheduling.
The execution aspects of managing a supply chain include: Establishing the price and availability of the product; Mapping out alternate product transportation logistics; Ensuring the availability of resources needed for manufacturing.
Because both these aspects contain several mini-aspects (example: planning encompasses both determining the best transportation methods and analyzing bottlenecks in the supply chain, as well as other aspects), there are supply chain management software applications that are devoted to automating each specific mini-aspect. There also exist packaged software applications that attempt to automate the entire process.
Enterprise resource planning software is designed to integrate various aspects of a company’s information technology infrastructure together into a cohesive whole. The goal of this integration is to improve efficiency by allowing broader access to data across a company’s entire information technology network, and to reduce costs by making disparate software systems unnecessary.
Enterprise resource software often incorporates much of the functionality of supply chain management software, and in some cases, businesses have chosen ERP software to handle their supply chain needs in lieu of SCM.
As a supply chain manager, your task will be to fully understand the benefits and disadvantages of both types of software, and to decide which one will best suit your supply chain needs. Furthermore, you will need to sell others on the need for your software choice, especially in situations where a preference for established software is deeply entrenched, or where the benefits of adopting a new software solution are not readily apparent.
You’ll also have to ensure that the software is sufficiently tested before it is released to your entire supply chain. Nothing will erode employee and partner confidence in your software choice faster than glitches and problems that could have been easily spotted and rectified with proper testing.
The ability to develop and execute projects related to your supply chain is integral to your success as a manager. There are many complexities involved in managing a project. In addition to deciding what the goal or objective of the project will be, one also needs to consider administrative dynamics and who will be in charge of the project, as well as understanding the relationship between purchasing and supply chain management.
For supply chain managers, these complexities are made even more so by the fact that the project is, by nature, a multi-entity operation. Manufacturers, distributors, retailers, warehouses and other organizations involved can all potentially be factors in, and be affected by, the project. As such, care must be taken to involve all the relevant parties as much as necessary, without losing the focus of the project or allowing the scope to grow excessively large.
In some situations (such as the relationship-building example described earlier in the article), companies in the supply chain may already have formed a business or strategic alliance which underlies the supply chain partnership. In situations like this, the supply chain manager will have an easier task in managing the project because the terms of the business relationship between partners has already been established.
However, this can also present problems down the line, because if the project is managed in such a way that profits for one of the companies is negatively affected, the overall business relationship can potentially be damaged. So care must be taken to keep the bigger picture of the existing business relationship in mind when implementing projects that could jeopardize years of accumulated goodwill if managed wrong.
Additionally, the supply chain manager must accommodate for the realities of shipping, storage and delivery. Different types of products often have different needs and requirements for physical handling. A box of memory chips and a box of potato chips may require two very different approaches to transportation and storage, even though both are boxes of chips. Another consideration is product size.
Miscalculation of product size can lead to inefficient storage, which can slow down the supply chain and inhibits profits. Many of these specific product requirements can be determined by the supply chain manager using electronic models.
Finally, the project manager has the responsibility of ensuring that data exchange happens efficiently between links in the supply chain. Communication between information technology personnel in the companies involved in the project must be maintained so that any software related issues are discussed and dealt with before they can cause delays.
In conclusion, the skills needed by today’s supply chain manager are:
1. The ability to work with people. This skill encompasses leadership and relationship-building.
2. Supply chain analysis. This skill involves the ability to use technology to identify inefficiencies in the supply chain process that lead to greater costs and customer dissatisfaction, with the goal of eliminating these inefficiencies.
3. Implementing IT systems. This involves choosing the best SCM or ERP software for your business needs and ensuring that the integration of this software goes smoothly.
4. Managing Projects. This means accurately laying out the scope and complexity of a project and taking into consideration all the technical, administrative, and relationship factors that the project entails, and executing the project according to those parameters.
Supply chain management is a field that grows more complex by the day. As new technologies emerge and old ways of thinking grow outdated, managers will have to adapt or risk going the way of the dinosaurs. While no one can tell exactly what the future will bring, the four skills highlighted in this article will give the supply chain manager who chooses to use them a substantial advantage in today’s changing business landscape.
Supply Chain Management