Skills for the New Era of Supply Chain Management – A Look to the Future

November 1, 2002 Staff

As we approach the end of the year, many of us are wondering what the new year will bring for us, as well as what it will take to keep our individual organizations on top. If you haven’t thought about it yet, chances are that any amount of time you spend thinking about this issue will produce the same conclusion: your organization needs people with the right skills and leadership qualities to bring you to the next level.

Moreover, education on supply chain management is vital to the success of your organization and to the survival and growth of the profession. There have been dramatic impacts upon and changes within the field of purchasing/supply management. Examples, but not limited to, are: 1) changing nature of customer / supplier relationships and alliances; 2) the growth and use of the Internet to facilitate e-business; 3) significant reductions in stafs; 4) focus on strategic goals related to cost/value; 5) the evolution of supply chain management as an integrated competitive business strategy, and the contribution of purchasing to this strategy; 6) the uncertainty brought about by 9/11 in a time when nothing can be taken for granted.

There is also increasing anecdotal evidence that many of the Chief Supply and Logistics Officers of this decade are being assigned from outside the purchasing and logistics field. These appointments bring with them two strong implications: a) senior management want different things from the purchasing/logistics management groups than they perceive would be obtained by promoting from within, and b) these new people appear to be appointed with short term employment contracts/agreements and have defined missions for change that must be accomplished in a defined period. These conditions comprise the landscape within which traditional purchasing and logiostics personnel are operating in today. It is appropriate to revisit the realm of education training in the new millenium in the context of this changing environment.

The Supply Chain Resource Consortium at NC State University, along with faculty and students from Florida State University, are currently in the middle of a major project studying the types of needs that new supply chain managers will require in the future. The study is being funded by the Center for Advanced Purchasing Studies. Supply and Logistics managers from a number of companies including ABB, Bayer Corporation, Compaq, Duke Energy, John Deere, Progress Energy, Phelps Dodge, Sonoco, Texas Instruments, and many others, participated in a series of four roundtables held in Kansas City, Boston, Phoenix, and Raleigh. The discussion provided valuable insights into the personnel requirements of future supply management organizations. A summary of the salient themes that emerged during the focus groups are as follows:

Supply Chain Trends:

Move towards centralized procurement/logistics and tracking of costs
Rationalization of the supply base to a small set of strategic suppliers
Outsourcing the procurement of non-strategic items
Stress on real time response to customer requirements
Greater emphasis on better forecasting, sales and operations planning and information sharing across the supply chain
Increasing pressure to reduce costs and demonstrate credible cost savings
Rising bar in terms of skills and training desired in supply management professionals

Growing emphasis on certifications and training for procurement professionals

Supply chain challenges facing companies include:

Inability of supply chain personnel to keep up with the rapid environmental changes and technological changes in procurement systems
Integrating multiple systems existing internally
Managing inventory levels – accumulation of inventory in the pipeline
Maintaining training budgets in a difficult economy

Greater emphasis on price rather than total cost in the wake of the growing pressure to increase revenue and reduce cost

Solid skills required in future supply chain managers include:

Project management
Technical understanding
Cost accounting skills
Ability to understand financial statements
Understanding of e-business / e-procurement systems
Troubleshooting, problem solving
Understanding of cross-cultural / global issues
Business ethics

Understanding of the legal issues involved in managing contracts

Soft skills and personality attributes required in future supply managers include:

Ability to communicate effectively through presentations, email, one-on-one, and team discussion
Ability to logically organize thoughts
Ability as a natural facilitator to enable team-based decisions
Time management
Leadership
Understanding of customer’s expectations
Vision – creating the environment
Desire to learn
Ability to present oneself with confidence
Ability to think on ones feet

Ability to pass on knowledge and mentoring

In the future, we are likely to see:

Growing emphasis on “Demand Chain Management”
Greater expertise in effectively managing relationships through collaboration and measurement
Increased visibility of price, but focus on cost management

Alternative training technologies will become commonplace

Biggest gaps today in university training

Communication and soft skills
Teaching competition instead of collaboration

Logistics management – few academics understand it

These relationships are effectively captured in the figure below. As you can see – the need for managers who can effectively manage uncertainty and change is more important than ever. Managers will need to be able to lead teams of multi-skilled individuals, make decisions with less information yet be able to have effective contingency planning requirements in the background. Managers must further be able to effectively understand the impact of supply chain decisions on the bottom line, and be able to apply activity-based costing decisions to supply chain activities, (not just manufacturing activities). For more information on this study and other courses offered in this area, visit (https://scm.ncsu.edu/).

These skills are clearly not easily found – nor are they always high on the list for your HR department’s agenda. However, they are more important than ever. As Charles Darwin noted when he developed his theory of evolution:

“The species most likely to survive are not the strongest; nor are they the most intelligent; the species that survive are those that are best able to adapt to change.”

Change	Driver	Impact
Shorter leadtimes	More competition on projects	Must work closer with suppliers
	Focus on economic profit	Delay expenditures
Aging workforce	Nature / workforce strategy	New skills are difficult to get
Reorganization and mergers	Growth in the industry	Opportunity to reduce cost
	Deregulation	New skills – must be able to merge supply bases from different companies
	Increased expectations for creating shareholder value	Must find creative ways to show value
New technologies	Business leaders say we need to adopt new technologies to become more efficient	Systems integration Culture Controls Policies
E-business	Doing more with less	Need to improve skills
		Change management Supply base management
Change in customer demographics	Diversity	Need to find ways to do more business and develop minority suppliers