supply chain talent

The Supply Chain Insights Global Summit is a week away. We are currently tabulating the results to publish the report, “Top 15 Supply Chains to Admire.” In this report, we track the progress on balance sheet performance of companies by peer group and chart the relative improvement for the period of 2006-2013. This work has taken us two years to finish.

As I look at the results—and reflect back on my ten years of experience as an analyst with these companies—I find the differences between a leader and laggard boil down to five things: supply chain leadership, talent management, active design of the supply chain, strong horizontal processes, and being good at supply chain planning. While consultants and technology providers may preach that you need the latest and greatest technologies, I often see companies implementing the wrong technology, doing it badly, and sending them backwards. Supply chain leaders that make the biggest difference build supply chain potential and make small, incremental progress over time.

A Closer Look at Supply Chain Talent

For most, supply chain talent management is challenging. In the recent report that we completed, Supply Chain Talent – A Broken Link in the Supply Chain, we shared data from a recent study that only one in three companies today thinks that they are managing supply chain talent effectively. When I look at the performance data, I think that it matters.

Figure 1.

Ease or difficulty of filling supply chain positions

Talent management is not trivial, and supply planning is at the nexus of the talent problem.  Today there is a shortage of mid-management supply chain talent; and as shown in Figure 1, some of the toughest positions to fill are in the area of supply chain planning. Supply chain planning requires a good understanding of the business, strong influence skills and deep analytic capabilities. These are hard to build, and the loss of a great planner can hurt.

Job satisfaction for supply chain planners is low. As a result, companies are churning planners—they are moving from one company to another. Due to the unique skill mix, it is difficult to recruit supply chain planners. Which makes me wonder, if we gave our supply chain planners more good old-fashioned love, would we have fewer open positions? And, if the position was more desirable, would the job have higher satisfaction causing others within the company to want to do the job more readily? I think so. Here I share my point of view.

What I See in the Data

From time to time at Supply Chain Insights, we do quantitative assessments of individual companies to understand the dynamics within the supply chain organization. These are private studies that we do for clients, and we keep the results of these studies confidential. However, time after time, we see a consistent theme in the data. Supply chain planners do not feel appreciated. The job is tough and the obstacles are many. Here are the seven issues that we see most frequently:

  1. Changing Priorities. It is hard for a planner to keep up with ever-changing priorities. Planning takes time and the use of optimization requires a clear objective function. With conflicting and ever-changing priorities, it is hard to do.
  2. Rewarding the Urgent. No Time for the Important. Most organizations reward the fire fighters. Planning requires a focus on the important and allowing planners time to plan. Culturally, this is a tough shift. 
  3. Giving Planners Time to Plan.  Good planning takes time. When an employee is always fighting fires, they do not have the time to plan.
  4. Making Their Positions Meaningful. At the end of the day, when we turn turn out the lights in our offices, we all want to think that we make a difference. Supply chain planners want their work to be used. They want to make a difference. Too few companies actually use their plans to make better decisions. The degree of this gap has grown greater in my time as an analyst. The good have gotten very good, and the average companies have gotten worse.
  5. Giving Planners Technologies That Are Easy to Use. The right supply chain planning tools have the right data model that is set up to adequately model the environment, and the planners are supported by easy-to-use business intelligence tools. As you can see in our reports on technology satisfaction, Voice of the Supply Chain, and Maximizing the ROI in Supply Chain Planning,  both are an issue right now.
  6. Creating the Right Work Environment. Politics, and the lack of understanding of the basics of supply chain, are issues for supply chain planners. The planners see the gaps in the organization first, and they need leadership help drive alignment.
  7. Clarity of Career Paths. In the early days of creating a supply chain planning group, the positions were entry-level and there was high turnover. In the companies that do it well, there are established career paths that reward planning.

What I Hear in Discussions.

When groups are doing well, you don’t hear stories like these:

  • “Yesterday, I presented the demand plan to my boss. He asked me to go back to my desk and create a better plan. When I asked him to define a “better plan,” he said that it would be one that showed the company growing with less demand error. When I asked him how to do this, he said just work on the plan and make it better. I shook my head. I cannot change the basics of the business.”
  • “Good news travels fast in our company, and bad news is seldom communicated. So, when we run a demand plan on market data and see that products are not selling, our jobs become very uncomfortable.”
  • “My boss criticized our work today on the demand plan stating that the demand error was too high. He mentioned to one of my colleagues that he wanted to recruit a new demand planning team to reduce the error. He just does not understand that the demand error is characterized by market conditions and what you are selling in the market. He thinks that he can just get a new team and that the demand error will magically go away.”
  • “My general manager believes in having a high bias. He thinks that if you forecast high that you are going to sell more, then you will sell more. When I tried to explain the issues with over-forecasting on waste and inventory obsolescence, he was dismissive. We have to keep two sets of ‘internal books’. One set has the marketing and sales bias and the second has what we think that we are really going to sell.”
  • “We are always on the hot seat. Whatever goes wrong, it is attributed to issues with the demand plan. I often feel that we are the scapegoat.”

Unfortunately, we hear these stories more than we’d like. So, on this sleepless morning, as I sit in Stockholm trying to recover from jet lag, I want to ask you a question. Have you given your supply chain planner some love today? If not, why not stop by their office this morning and make the first step. I think that it matters.

We will be discussing the issues and opportunities with supply chain talent in greater detail at our upcoming Supply Chain Insights Global Summit. We hope to see you there. If not, try to join us by ustream. Supply chain talent and the role of supply chain planning are topics that I think need to be elevated.

 

Supply Chain Talent: A Broken Link

by Lora Cecere on August 1, 2014 · 0 comments

These are the grim facts. Only 9% of companies feel that they manage supply chain talent better than their peers. The issues are growing. Job turnover is 15% and new positions remain open for 4 months before they are filled. I think that supply chain talent is a broken link in the supply chain. I also believe that the adoption of new mental models is a barrier to progress.

On August 5th, I will be hosting a webinar on supply chain talent.  I will be joined by Keith Holliday of Sunoco Products and Jacqueline Faseler of Dow Chemical to discuss the research results of a talent survey that we are completing. The survey is still open and the final results will be shared at our upcoming Supply Chain Insights Global Summit on September 10th-11th.

During the webinar, I look forward to dialogue with the panel on the research findings on these charts. I find it interesting, in the research, that supply chain talent is seen as an increasing point of pain and that the adoption of new ways of thinking is a barrier to closing the gap.  I want to know more about why the panel thinks this is the case.

 

A Case Study

I welcome their perspective on how to solve the problem. Let me explain through a story. Last week I was on a call with a client that was looking for a consulting partner to help redesign demand planning processes. This new contact had previously been a CFO at the same firm and was new to supply chain. Early in the conversation, the client admitted that they did not know much about supply chain. The organization had implemented a good demand planning technology, but badly, ten years ago. In this initial implementation, they made the mistake of automating their old processes with new technology; and due to other project commitments, the organization has not upgraded the technology and rectified the situation.

The conversation went like this, “I want to implement best-in-class demand processes. I don’t have time to look at the technology, and I want to hire someone with gray hair that has done it well at another company to come and help me.”

I scratched my head. My struggle was three-fold:

  1. The demand planners at this organization are quite good. I have worked with them for many years. It is my belief that they would give this CFO better advice than 9 out of 10 consultants that I would shortlist into this account. They have been looking for management support to fix a bad situation for a decade, but to no avail. Based on the conversation, I don’t believe they’ll have a voice in the outcome.
  2. The initial implementation was flawed because the company automated their past practices and did not understand what was possible through technology automation. It is happening again. At the time of the first implementation, they were using spreadsheets, and they implemented the new technology based on spreadsheet-like thinking, and never used the optimizers. Using this approach, when will the company ever be able to look at what the processes could be through the advancements in technology? The client expressed the new goal as a “redesign of the demand planning processes with no discussion of technology.” This well-intended CFO is making no attempt to understand what is possible through the software. My struggle is that I find it almost impossible to design demand planning processes without including a discussion of the technology’s capabilities. Why?  The technologies, and potential outcomes, are so different by system; and I find most executives that are not familiar with planning woefully lacking an understanding of what a good demand planning implementation could be. Demand planning cannot be done well on a spreadsheet.
  3. As we talked, it was clear to me that this prior CFO was more comfortable with a gray-hair approach. The request was for someone who is seasoned and had implemented demand planning processes before. My issue is that these processes are in a massive overhaul in the industry, and that someone who has implemented one or two times will only understand this more limited perspective, not what is possible. The CFO was unwilling to engage with the technology provider resources (whose resources are quite good) to understand what is possible, and they did not want to tap the resources of more seasoned consultants that had a broader perspective. It is my hope that the person she finally selects to help reads my research, and will bring these insights into the account:
  • Consensus Forecasting Sounds Good, But Has Been Problematic. Consensus forecasting processes implemented in the beginning of the last decade to include sales and marketing input sound good, but introduce bias into the forecast. The average bias can increase 5-9% through consensus forecasting if the organization does not adopt Forecast Value-Add techniques.
  • Demand Planning Needs to Report to a Neutral Party. When demand planning reports to a sales or marketing function, the forecasts tend to have higher error and bias. It needs to report to a central planning group or a center of excellence. The focus needs to be on the reduction of bias and error.
  • Use the Technology. I can count the number of successful demand planning implementations on my two hands. There are not a lot of great demand organizations: most have organized for supply. However, when the technologies are properly implemented, and the forecast is used in decision-making processes, it matters. I can see it in the results that I will present in Scottsdale. This is one case in supply chain thinking where I think the understanding of what the technologies can do is paramount to making improvement. However, executives do not trust software vendors; and based on the dynamics of the software vendors in the market, I understand why. This continues to be a dilemma.

So, let’s apply the lessons from this story to the talent discussion. The story demonstrates two gaps that I see often that tie to the talent discussion we will be having  next Tuesday.

The first gap is the senior leadership’s understanding of supply chain. When senior leadership is assigned to manage the supply chain without training or prior experience, there is a lack of understanding of what is possible. While financial processes are transactional in nature and can be managed in spreadsheets, the supply chain decision-making processes are forward-looking flows requiring technology and optimization. Staying current on industry practices matters to performance. A new leader has to quickly sort out who they can trust in their organization and build a guiding coalition.

The second gap is the management of talent. How do these demand planners get a voice to drive adoption of an automated process that could work?

At the end of the call, I short-listed some consultants  I thought could help, but I think that the dialogue represents the essence of the problem we will be talking about on Tuesday in the webinar; and on September 10th and 11th at the Supply Chain Global Summit in Scottsdale, AZ. In short, senior leaders and directors need to reskill. Supply chain processes and technologies are changing and can drive improved outcomes. It shouldn’t be about yesteryear’s processes and technologies with limited thinking. Instead, we need to unleash the power of the supply chain team to scale new heights. It starts with talent. For me, this is exciting; and, I believe that our mental models are at the crux of the talent issue. What do you think?

I hope to see you there!