Supply chain excellence

Today, I finished up a report on  supply chain talent. After doing the analysis of the results, I even more firmly believe that supply chain talent is the missing link in the supply chain.  In figure 1, I outline the company’s biggest gaps. It is the sourcing and development of mid-management talent. YOWZA! It is large.

Figure 1.

 

Isn’t this ironic? Most of the current company’s efforts are focused on new-hire recruitment or mentoring for high-performance development for executive level positions. There are few companies that understand and have addressed the mid-management talent issue. OUCH!

Figure 2.

As a result, mid-management supply chain talent is getting short shrift. If you cannot make our Thursday webinar or the Supply Chain Insights Global Summit, here are a couple of facts to consider:

Opportunity to improve. Overall, companies rate their capabilities to manage supply chain talent worse than their peers. In the study, when companies were asked to self-assess their capabilities to manage supply chain talent, 17% self-rated that they perform better than their peer group while 34% reported that they do worse than their peers. And, we all know that self-assessment scores tend to overstate capabilities. <It is a bit like me reporting my weight on my driver’s license.> I think that it is worse than reported…

High turnover. Average turnover of supply chain managers is 15%. It is increasing. In the study, 46% of companies attempt to hire from within the company, and 17% fill roles primarily through recruiting talent from other companies.  External recruiting is becoming less and less successful.

Shortage of talent. The average company in the study has four positions open for five months. Companies are is feeling the pain of open positions. The most difficult positions to fill are in the areas of planning that require both a technical mastery of technology and an organizational understanding of the business drivers.

Stiff competition for college graduates. Today, there is a 6:1 demand to supply ratio for new college graduates in supply chain management. Competition is intense and there is a lot of effort to attract the best and brightest from college recruiting; however, the larger issue is with the retention of mid-management talent.

Working on the Right Stuff? In short, we need to broaden our scope. The current focus is on recruiting college graduates and high-performing talent with little attention being given to middle-management talent development. Only 23% of companies responding to the study have a planned cross-functional training program for existing employees. This study points out the need for skill development in the areas of training and career progression to give employees cross-functional breadth.

Want to know more? On Thursday this week, I will be joined by three of my favorite people—Joe Krkoska, Dow AgroSciences; Nick Little, Michigan State; and Marcia Conner, Sensify (a specialist in adult learning)—for a webinar on Supply Chain Talent.  In this session, we will be sharing insights from our recent study. We will continue this discussion at the upcoming Supply Chain Insights Global Summit in Scottsdale, AZ on September 11th and 12th.

I would love to hear your thoughts. Does the study mirror what you are seeing in your organization?

Why?

by Lora Cecere on June 19, 2013 · 1 comment

Supply chain management, as a practice in commercial operations, is now thirty years old. Early 2012 marked the end of the third decade and 2013 finds us into the fourth.

When we look backwards and use the results on corporate financials as a litmus test on supply chain excellence, we find that:

  • We have made Improvements in Productivity. Due to improvements in connectivity, 90% of industries have made improvements in productivity (revenue/employee). The chemical and consumer electronics industries have made the most progress.
  • Balance Remains an Issue. Companies are stalled on improving customer service and forecast accuracy.
  • Complexity has Grown. It comes in many flavors–increase in inventory, changes in sales policies, new product lines– all add to the complexity.  Supply chains have not morphed to manage the complexity at the same cost, quality and level of customer service.
  • Cycle Management is Stalled. The only industry that has made progress in inventory management is consumer electronics.

Today, I spoke at the Chief Supply Chain Officer conference in Chicago at the Eye for Transport event on the results of the research. When I finished the presentation  (the materials are available on slideshare.) I asked for questions. The person in the audience asked  me “Why did I believe that this happened?  Why do supply chain professionals believe that they have made improvements when they really have not?”  Here I share my answer:

1) Accountability. When it comes to supply chain processes, companies have not held themselves accountable to the balance sheet. Most companies are surprised when we share their results on the Supply Chain Effective Frontier. (The ability of a company to balance and improve growth, profitability, cycles and complexity in the value chain over the decade.)

2) Definition of Supply Chain as a Function versus a Way of Doing Business.  The original intent of the supply chain was to build “end-to-end processes.” Over time the term has evolved to describe a ”function.” Less than 1% of companies have a leader focused on the building of end-to-end processes. Most of the opportunity lies in the crevices between functions within the organization and between companies.

3) Leadership. Many executives lack an understanding of the supply chain as a complex system and how to manage trade-offs.  There is a lack of understanding of the basics of agility and responsiveness.

4) Need for Strong Horizontal Processes. Companies have focused on vertical processes. There is a need for cross-functional alignment through horizontal processes. Companies with strong horizontal processes of revenue management, new product launch, Sales and Operations Planning (S&OP), Supplier Development and Corporate Social Responsibility have higher performance.

5) Alignment. By and large, organizations are not aligned to drive cross-functional performance. Based on recent research, we find that companies that have invested in Supply Chain Centers of Excellence, as shown in figure 1, rate themselves higher on cross-functional alignment. The presence of these centers is relatively new. Without them, the gaps are large.

6) Project Focus versus Systemic Improvements. I believe that we have made progress on projects, but that we have not translated these projects into holistic improvements.

7) Belief that we had Best Practices.  I strongly feel that we have evolving practices.  I have seen too many companies adopt practices that were not a good fit because they were recommended as best practices. Examples include one-number forecasting, consensus forecasting without bias and error accountability, CPFR without measuring forecast accuracy of the downstream partner…. The list could go on and on.

What do you think? How would you have answered the question? Anything you would add?

Next week is the first time that I am home in three months.  WHEW!!! It will be nice to be home and to have time to write on this second book, Metrics that Matter.  If you have a story of supply chain excellence that you want to share for my book, please drop me a line.