What will the supply chain function of the future look like? This question increasingly preoccupies leaders in the sector. While every business function is either undergoing or considering reinvention, supply chain teams, in particular, find themselves at a crossroads ‒ and many are unsure which direction they should take.
Much of the pressure comes from within the business. COVID-19 prompted the C-suite, led by the CEO, to take a far more hands-on approach to supply chain management than previously. But now, many supply chain leaders report that their executive colleagues are moving on to other issues and looking to the supply chain manager to resume leadership of the function.
Survey data supports this shift. In 2021, at the height of the pandemic, one poll of 3,000 CEOs found that supply chain issues were more likely to keep them awake at night than any other issue. By contrast, the latest Deloitte annual survey of CEOs, published in February, ranked supply chain disruption as only ninth on the list of the issues that most concern leaders.
This is not to suggest that supply chain pressures have disappeared. Far from it. Disruption is ongoing, with conflict in the Middle East the latest geopolitical threat. Moreover, volatility remains heightened, with industries such as pharmaceuticals and renewable energy and transport seeing huge spikes in demand for their products.
Rather than it being that supply chain no longer requires such attention, then, it is that CEOs have fires to fight elsewhere. Geopolitical pressures are affecting the whole business and economic challenges such as high inflation and low growth are putting a drag on demand and squeezing margins. A painfully competitive labor market does not help, as CEOs struggle to find the appropriately skilled individuals to manage digital transition.
Inside the supply chain function, meanwhile, leaders face other questions. The industry has seen a number of its best-known executives step down in recent months, perhaps owing to exhaustion after steering their organizations through the pandemic. At more junior levels, staff are similarly leaving in ever greater numbers.
Research from analyst Gartner underlines the point. Three-quarters of supply chain leaders expect staff turnover in their teams to increase over the next five years. That could also include staff who are leaving supply chain altogether, attracted to opportunities in other parts of the business that they perceive to be more exciting.
“ This more open-minded approach to recruitment will allow organizations to dip into a much deeper talent pool at all levels of seniority and experience.”
Recruiting a new generation of team members for the supply chain function will be challenging but it does at least provide clear space in which to reassess the skills and experience required. The imperative – and the opportunity – is to build a supply chain function fit for the challenges of the future.
Excitingly, many supply chain leaders believe the function can now significantly broaden its scope. According to one recent global survey of executives in large organizations, the trend towards end-to-end supply chain management continues to accelerate.
End-to-end supply chain management spans disciplines previously categorized under the familiar headings of “plan,” “source,” “make” and “deliver.” What leaders are now recognizing is that these aspects touch the operations of every function. In other words, as the business thinks about how to serve its customers, it brings the supply chain function into the organization’s value chain at a much earlier stage – and retains its services all the way through to fulfilment. More broadly, supply chain leaders will begin to take on more responsibility in a host of areas that, in the past, were fenced off to them, including product development, finance, and sales.
This broader role raises fundamental questions about how the supply chain function operates and organizes itself. How does it build constructive working relationships in each area of the business where its input is now required? This is a crucial question, given the often-siloed nature of supply chain functions.
Some organizations are now building much larger functions to deliver end-to-end supply chain management. Others are wedded to more traditional models, with procurement incorporated into the finance function, say, or delivery coming under the aegis of sales. Either of these approaches can be effective – provided it remains connected.
The shift to end-to-end supply chain management also has implications for recruitment, requiring the availability of a broader set of skills. To fill these gaps, it may need to recruit with more imagination, looking to people who have never before worked in roles covered by the traditional definition of supply chain management.
“ New joiners with little or no experience of supply chain management will need support in adapting the specialist skills from previous roles to the requirements of supply chain. ”
Even at the most senior level of the function, this imperative to look beyond traditional profiles will be important. The CSCO at a large manufacturer, for example, is as likely to have a background in product development and assembly as in sourcing nowadays. Such changes constitute recognition of the widening responsibilities of the supply chain leader.
This more open-minded approach to recruitment will allow organizations to dip into a much deeper talent pool at all levels of seniority and experience. It also has the potential to make opportunities in the function more attractive, with further, exciting branches of career development becoming possible, as well as offering a higher profile in the business. Both benefits will be valuable in a job market where 75% of European employers are now struggling to find workers with the skills they need.
Equally, however, this will require supply chain leaders to invest more in training and education. New joiners with little or no experience of supply chain management will need support in adapting the specialist skills from previous roles to the requirements of supply chain.
Another aspect of this shift to a broader remit is that the technical skills once non-negotiable for supply chain professionals are no longer essential. Rather, the emphasis will be on the ability of the team to communicate effectively with the rest of the business.
After all, supply chain executives have grown up in a world of specialist jargon and acronyms, which, in the rest of the business, will be less than fluent in supplier corrective action requests or on-time-in-full delivery rates. The supply chain function must learn to speak a language that all functions can understand.
The good news is that the disruption and volatility of recent years has brought supply chain leaders and other C-suite executives together. Now, they must build on this experience. The CEO may need to focus elsewhere, but this only increases the importance of strong communication between the supply chain function and the rest of the business.
This may sound daunting, particularly as supply chain leaders are still battling operational disruption and volatility. Indeed, they may reflect that strategic reinvention would be better left until a period of greater stability.
There is, however, little prospect of such calm arriving anytime soon and the supply chain cannot afford to wait for things to settle down. A new approach to supply chain management is required and, to develop it, organizations may need to look in some unfamiliar places
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