More and more companies have complex, global supply chains and are evolving their management structures to maintain service levels and control working capital. Sales and Operations Planning (S&OP) is slowly making headway to align demand and supply.
But the evolution towards end-to-end integration has had unexpected consequences for supply chain careers.
Factories used to stand separate from distribution and demand planning. Factory managers held positions of prestige, working directly with general managers to coordinate production. In an integrated global supply chain, the factory manager’s role has changed, says Rachel Sheehan, former Global SVP Supply Chain Talent for multinational beauty company Coty.
It is a more matrixed role, requiring special effort to maintain proximity to business units. It may have lost functions to mutualization, such as sourcing, new product introduction (NPI) coordination, accounts payable and production planning. The challenge, according to Rachel, is to have factory managers “feel they have a seat at the table, albeit with a modified skill-set and organization design than in the past”.
A career in factory management may feel less attractive. Factories are also often in remote locations while planning sits in urban centers. “This makes people hesitant to go into factories. And yet the factory experience is essential,” says Rachel. “The centralization of functions creates the risk that you have engineers who have never worked in factory, don’t want to work in a factory, and don’t appreciate the challenges. We’ve created an integrated supply chain and we are more siloed than ever.”
A shift from historical roots
The core competencies of supply chain management seem to be drifting away from distribution and transportation. 3PLs (third-party logistics) have become prominent in FMCG, and the growth of 3PLs is not limited to this. One estimate projects the 3PLs industry to grow 37% between 2016 and 2022. As supply management encompasses planning, sourcing and production, supply chain opportunities have slowly shifted from their historical roots.
This influences the career paths that supply chain professionals choose. A path through distribution and transportation is less desirable when the distribution centers are slowly being outsourced. Yet with 3PLs still seeing cost as driving business awards, salaries for logistics expertise are under pressure.
With the diminished appeal of factories and DCs, many young supply chain professionals avoid production and logistics, in favor of sourcing, planning and NPI coordination. Despite this, Rachel says, supply chain recruitment remains focused on engineering graduates.
However, academic institutions are stepping up. Private institutions like APICS (American Production and Inventory Control Society) have modernized their certification programs, and others have focused on planning, like the program from IBF (Institute of Business Forecasting). These certifications help professionals establish credibility and support mid-career transitions.
There has been an increase in supply chain courses. Gartner, the supply chain advisory and research company, has found that U.S. university masters programs in supply chain have grown 67% from 2016 to 2018. There are 38 MBA programs with a supply chain focus. Twenty years ago, there were virtually no academic offerings in supply chain. These programs are creating generations of professionals specifically choosing a career in supply chain.
But is the supply chain profession fit for purpose? As e-commerce expands and companies struggle with execution costs, demands on supply chains will grow. Companies may find their factories more isolated from their markets, logistics outsourced, and struggle to drive innovation.
Big Data, advanced analytics and AI (artificial intelligence) will continue to grow across the supply chain – 84% of supply chain executives consider machine learning as ‘important and disruptive’. We recently met an executive supply chain recruiter who emphasized deep data literacy as a ‘must-have’ attribute. After much fanfare, S&OP has yet to fully take hold. Only 40% of companies say they have an S&OP process. Some companies are exploring outsourcing demand planning altogether.
The challenge ahead
The role of the supply chain itself is in flux. Only 47% of chief supply chain officers say the supply chain is seen as important as sales & marketing or R&D/product development, according to SCM World, down from 59% five years ago. SCM World found that retaining talent and offering progressive careers are the two biggest supply chain HR challenges.
Several companies have shrunk or eliminated their supply chain Centers of Excellence (CoE), cutting off drivers of innovation, best practices and end-to-end integration.
The future may feel daunting for supply chain careers. One solution could be to focus on the emergence of shorter lifecycles, stock keeping unit (SKU) explosions due to mass customization, and more demanding consumer behavior that requires synergies between marketing, commercial and industrial activity. Broader roles such as NPI coordination and demand planning may hold the key to compelling career opportunities.
Gustavo Ghory, former VP Global Manufacturing for P&G, and current chairman of SmarterChains, concurs: “Supply chain executives are in a unique position to integrate innovation plans for new products with executional and planning capabilities for delivery, turning the plan into a reality in the marketplace.”
Ralf Seifert is Professor of Operations Management at IMD. He directs IMD’s new Digital Supply Chain Management program, which addresses both traditional supply chain strategy and implementation issues as well as digitalization trends and new technologies.
Richard Markoff is a supply chain researcher, consultant, coach and lecturer. He has worked in supply chain for L’Oréal for 22 years, in Canada, the US and France, spanning the entire value chain from manufacturing to customer collaboration.
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