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Deep Dive on 2017 Predictions for Industry and Global Supply Chains- Prediction Three: A Supply Chain Talent Perfect Storm

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The following Supply Chain Matters blog is part of our ongoing series of deep dives into each of our previously unveiled ten 2017 Predictions for Industry and Global Supply Chains.

At the start of the New Year, our parent, the Ferrari Consulting and Research Group along with our Supply Chain Matters blog as a broadcast medium, provide a series of predictions for the coming year. These predictions are shared in the spirit of assisting industry specific and global supply chain cross-functional teams in helping to set management objectives for the year ahead. Our further goal is helping our readers and clients to prepare supply chain management and line-of-business teams in establishing impactful programs, initiatives, and educational agendas.

The context for these predictions includes a broad cross-functional umbrella of supply chain strategy, planning, execution, product lifecycle management, procurement, manufacturing, transportation, logistics and customer service management.

In an earlier Supply Chain Matters blog postings, we provided deep dives related to:

 Prediction One- Subdued World Economic Outlook and Heighted Uncertainty to Test Industry Supply Chain Agility.

Prediction Two- A Challenging Year in Procurement

In this third-deep dive series posting, we drill down on Prediction Three.

 

2017 Prediction Three: A Supply Chain Talent Perfect Storm

For all functions that make up the umbrella of today’s supply chain management capabilities, we predict a supply chain talent perfect storm, one that is sure to occupy more of the management attention of supply chain and business senior leadership. The perfect storm is increased skills demand meeting limited available skilled talent supply. As Bloomberg BusinessWeek declared in late December 2016: “Right now the problem isn’t too many workers who can’t find jobs. It’s too many jobs that can’t find workers.” The coming year may well provide a period where lack of skills and talent will take on a discernable and visible impact on required competences.

The perfect storm will come from the confluence of even more demands for supply chain agility and responsiveness to unprecedented business changes across industries, demanding that supply chain teams take on a more strategic advisory or business partner role concerning key decisions in manufacturing and component sourcing, supply chain network design or customer fulfillment changes. Taking on a more business advisory focus requires that supply chain leaders have more depth in their respective organizations to support simultaneous strategic, tactical, and operational support needs, coupled with augmented technology applications that enhance decision-making.

As noted in Predictions One and Two, the continued need for added people and process productivity along more with data-driven decision making capabilities will add to needs for supply chain digital transformation, which has a strong dependency on talent and organizational readiness. Organizations that are driven more by digital transformation capabilities imply self-directed teams, consequent avoidance of barriers among supply chain functional and line-of-business teams with tighter decision feedback loops. Not all organizations are prepared for this level of change.

One of our 2016 predictions noted that the widening of supply chain talent and skill gaps would require organizations to be more innovative and purposeful in recruitment, training, retention, and career planning. We expected organizations and recruiters to more broadly define and recruit employees from skill based dimensions and in expected performance parameters for both current and future organizational needs. We felt that individuals who possess required cross-functional hard and soft skills, including in-depth technology prowess will continue to experience a seller’s advantage.

In 2016, we expected manufacturers, retailers and supply chain services firms would encourage broader training, benchmarking, multi-business, and multi-geography opportunities.  We trusted that supply chain leaders would confront or at least influence the other elephant in the room, namely that of compensation plans related to required supply chain management skills and roles tied to performance, teamwork, and skill achievement objectives. We were hopeful that there will be more of such innovative compensation programs unveiled in 2016.

Regrettably, feedback indicated that many employers currently seeking highly skilled and in-high demand candidates, often offer the low-end of compensation levels. In-demand candidates were savvy enough to figure-out that their skills are drawing higher compensation in other firms or industries, thus recruiters began counseling employers seeking in-demand skills to lead with far more attractive compensation offers from the start or risk candidates quickly moving to other offers.

With the prospects of 2017 providing even more overall pressures to reduce supply chain costs, supply chain, procurement and product management related executives will be faced with difficult choices regarding the existing workforce. Executives who previously established multi-year plans to broaden skills and talent will face the reality that talent needs are more immediate.  With upwards of 10,000 baby boomers turning 65 each day, the skills and experience flight becomes ever more challenging. We expect supply chain teams to further explore phased retirement programs such as that practiced by Steelcase where retiring employees can opt for phased part-time work schedules to mentor and transfer knowledge.

Existing workers do not have the tools and training opportunities because business investment activities continue to lag. That obviously must change in 2017 and open question remains how or if this occurs.

As with 2016, those individuals possessing broad supply chain cross-functional process knowledge coupled with technology savviness and the soft skills needed to influence adoption and change to more advanced decision-making concepts will continue to be in very high demand. Efforts to increase U.S. or North America based manufacturing capabilities will once again face the reality of a lack of available skilled manufacturing talent.

Finally, we must state that existing supply chain focused professionals who have acquired many years of experience need to double their efforts to create awareness and interest for careers in supply chain management among secondary school and college candidates. Many supply chain focused professional organizations such APICS, CSCMP, ISM and others have been stepping-up career outreach efforts and resources, and such efforts could not be more timely. Consider adding your voices and influence.

For our part, we will continue to search out and highlight innovative supply chain talent recruitment programs and initiatives that are delivering meaningful results.

 

This concludes our Prediction Three drilldown in our series of 2017 predictions.  In our next posting of this series, we dive into Prediction Four that calls for increased anti-trade geopolitical forces providing added challenges for industry supply chains.

If readers or clients require further clarity, or wish to contribute additional thoughts related to what to anticipate in the coming year, you can contact us via email: feedback <at> supply-chain-matters <dot> com. Our final blog commentary of the series will include a summation of additional contributed thoughts for what to expect.

 

Bob Ferrari

© Copyright 2016. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.

 


Deep Dive on 2017 Predictions for Industry and Global Supply Chains- Prediction Two: A Challenging Year in Procurement

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The following Supply Chain Matters blog is part of our ongoing series of deep dives into each of our previously unveiled ten 2017 Predictions for Industry and Global Supply Chains.

At the start of the New Year, our parent, the Ferrari Consulting and Research Group along with our Supply Chain Matters blog as a broadcast medium, provide a series of predictions for the coming year. These predictions are shared in the spirit of assisting industry specific and global supply chain cross-functional teams in helping to set management objectives for the year ahead. Our further goal is helping our readers and clients to prepare supply chain management and line-of-business teams in establishing impactful programs, initiatives, and educational agendas.

The context for these predictions includes a broad cross-functional umbrella of supply chain strategy, planning, execution, product lifecycle management, procurement, manufacturing, transportation, logistics and customer service management.

In an earlier Supply Chain Matters posting we provided a deep dive into Prediction One- Subdued World Economic Outlook and Heighted Uncertainty to Test Industry Supply Chain Agility.

In this second-deep dive posting, we drill down on Prediction Two.

 

2017 Prediction Two: A Challenging Year in Procurement with Renewed Emphasis on Strategic and Technical Skill Needs

Unlike 2016, what is becoming near certain is that in 2017 multi-industry supply chains will be managing a period of rising inbound component and service costs with an increased urgency to augment skill and talent needs.

Supply Streams

The IMF Primary Commodities Index has increased 22 percent since February 2016 with the strongest increases attributed to fuel costs. Non-fuel commodity prices have increased as well, with metals pricing increasing 12 percent during 2016 and agricultural commodity prices increasing 9 percent during the year.

In late December 2016, the widely tracked Standard and Poor’s GSCI index of broad based commodities was up over 11 percent year-to-date. Energy was up 16.2 percent, Industrial Metals up 23.8 percent while Agriculture was down 2.34 percent.

The World Banks Commodity Markets Outlook published in October 2016 called for most commodity prices to rise in 2017, with energy prices expected to increase 24 percent during the year. The agency forecasted oil prices to average $55 per barrel during the year with stronger-than-expected OPEC production supply cuts evident in 2017. The usual caveats come with any major oil supply disruptions caused by global political tensions of conflicts across the Middle East. Non-energy commodity prices were expected to rise 2 percent in 2017. Downside risks for metals included caveats pertaining to a further slowdown of production growth in China, while upside risks were reflected in government-directed supply restraints across Asia and reluctance by producers to activate idle capacity if global demand picks-up.

Business Advisor and Strategic Skills

A challenge for sourcing teams among U.S. based manufacturing firms will be educating senior management on the implications of any added tariffs or trade barriers brought about by the new Trump administration and a Republican Party dominated Congress.  Another reality is that in certain industry sectors, value and supply chain supply competencies have deeper roots in the lower cost manufacturing regions of China and other Asian nations. Any new potential shifts of product or end-item manufacturing sourcing back to the U.S. will have to factor the broader supply chain impacts of such decisions. We have included further observation insights in 2017 Prediction FourFirst Signs of Global Trade Protectionism.

The role of the Chief Procurement Officer (CPO) will continue to evolve in 2017, requiring strategic business advisor skills in ascertaining various impacts to a rapidly changing global supply chain sourcing picture, supply chain risk factors and needs for higher levels of joint innovation from suppliers. Tactical leadership skills will likely be focused in facilitating a renewed business agenda for increased procurement costs savings to meet expected business margin and financial performance goals.

That will be challenging given the expected trends for rising inbound costs across many spend dimensions and categories. In some areas, increased foreign currency headwinds will present either added challenges or opportunities. For many businesses, low-hanging opportunistic cost savings opportunities have been already exploited which implies that with each significant year, the challenge drives deeper into the more complex areas of both indirect and direct procurement cost opportunities.

Industry supply chain teams that previously nurtured or invested in strong, collaborative key supplier relationships will experience the true benefits of such efforts as heightened supply chain risk and uncertainty increases, requiring a greater dependency on loyal and consistent suppliers.

Skills and Talent Management

One of the most significant challenges in 2017 will be in skills development and filling-in skill gaps in replacing retiring staff with increased levels of required technical skills based backgrounds.  Procurement teams have already consistently communicated changed skills requirements brought about by procurement’s changed role as being more of a strategic business advisor as compared to transactional procurement execution.

This challenge is not confined solely to procurement but across many other manufacturing, supply chain, IT, and product management areas. So much so that we have included Prediction Three- Supply Chain Talent Perfect Storm within our ten 2017 predictions.

The skills and talent challenge will become more apparent as this function is called upon to broaden collaboration and decision analysis efforts with product design management and key global and domestic suppliers.  Initiatives directed toward regulatory compliance changes, ongoing supply chain sustainability initiatives and changing contracted indirect services needs will require teams to increase collaboration efforts with other supply chain and business functions.

Increasingly, a fully integrated strategic sourcing and procurement process will become necessary and that will likely require augmented investments in technology beyond singular procurement business processes.

The Institute of Supply Management (ISM) serves as the principal professional organization for procurement. In March of 2016, we had the opportunity to interview Tom Derry, CEO of ISM.  Regarding the topic of skills development, the following was discussed:

“The responsibilities and scope of procurement are changing rather rapidly and there is a need to constantly stay current. To be effective, procurement professionals need to understand the broader capabilities of the supply chain such as planning, logistics and transportation. A procurement professional does not necessarily need to be an overall expert, but should be knowledgeable to the needed capabilities and impacts of decisions across the entire supply chain.”

In preparing this prediction related to procurement, we further had the opportunity to speak with Kristian O’Meara, Senior Vice President, Value Engineering at Bravo Solution. In his current role, O’Meara has had many interactions with procurement teams. He described the current skills challenge as an “HR hurdle”, the lack of talent depth, as one of the biggest challenges for this function in 2017. The stakes are often high. He cited industry data and observations from procurement executives themselves indicating that a missed-hire of adequately skilled or trained talent can amount to upwards of an 18-24-month setback in any given key role’s contribution to support business outcomes. That factors assumptions regarding that the average times to recruit available talent in the market, added with a 6-9 average learning curve for an individual to come up to speed in each role.

 

This concludes our Prediction Two drilldown in our series of 2017 predictions.  In our next posting of this series, we dive into Prediction Three that calls for a supply chain talent perfect storm in the coming year.

If readers or clients require further clarity, or wish to contribute additional thoughts related to what to anticipate in the coming year, you can contact us via email: feedback <at> supply-chain-matters <dot> com. Our final blog commentary of the series will include a summation of additional contributed thoughts for what to expect.

Bob Ferrari

© Copyright 2016. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved. Content appearing on Supply Chain Matters® may not be used without written permission of the author or The Ferrari Consulting and Research Group.

 


What Should Industry and Global Supply Chain Teams Anticipate in 2017

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As we approach the New Year holiday which marks the beginning of 2017, we are heads-down in the preparation of our 2017 Predictions for Industry and Global Supply Chains. Supply Chain Matters blog readers should anticipate the full unveiling of our 2017 predictions over the first two weeks in January.

We do however want to share some of the overall highlights as to what to expect in the coming year. crystal_ball

There seems to be little doubt that the year 2017 will present even more uncertainty and increased volatility for many industry supply chains. Organizations and respective supply chain teams will once again need to be prepared.

By the end of 2016, political winds of change were blowing a strong gust across the global economy. Economies are entering 2017 in a year of heightened uncertainty in markets, brought about by more volatile, populist focused political environments among major developed nations including Eurozone countries and the United States.

The unexpected election of Donald Trump as the new President of the United States is indeed sending out shockwaves around the world. The Eurozone, which was already attempting to deal with the unexpected results of Britain’s referendum vote to exit the EU (Brexit) faces yet another concern with Italy’s December vote to reject constitutional reforms, which prompted the resignation of Prime Minister Matteo Renzi. This could lead to a potential general election in 2017 that could have strong populist overtones including potential EU exit.

By late-December, the value of Euro was moving ever closer to parity with the U.S. Dollar, its lowest level since January 2003. Many analysts are predicting that in 2017, the Euro will indeed reach parity and could even drop below the value of the dollar at some point. That will add to the challenges of U.S. based companies to export products and services globally.

Industry and global supply chains should anticipate yet another challenging year with resiliency, adaptability, and risk mitigation as important competencies. Industry supply chains will again be called upon to help contribute to top-line revenue growth. We anticipate added pressures for cost controls and cost reductions, which will place additional pressures on capabilities. Supply chain risk factors will significantly rise across many industries and within many global regions, along with needs for educating line of business and senior executives on the supply chain implications of such risks. More informed and deeper analytical capabilities to ascertain various impacts to global component and finished goods manufacturing and supply chain sourcing will likely be an ongoing requirement and supply chain organizations who have not invested in such analysis and decision-making capabilities will be tested.

We anticipate another challenging year in procurement and strategic sourcing with a renewed emphasis on strategic and technical skill needs. The role of the CPO will continue to evolve into one of strategic business advisor, requiring enhanced cross-organizational influence skills.

One of the most significant challenges for 2017 will be reflected in a supply chain talent perfect storm, one that is sure to occupy more of the management attention of supply chain and business senior leadership. The perfect storm is increased skills demand meeting limited available skilled talent supply. As Bloomberg BusinessWeek declared in late December 2016: “Right now the problem isn’t too many workers who can’t find jobs. It’s too many jobs that can’t find workers.” With the prospects of 2017 providing even more overall pressures to reduce supply chain costs, supply chain, procurement and product management related executives will be faced with difficult choices regarding the existing workforce. Executives who previously established multi-year plans to broaden skills and talent will face the reality that talent needs are more immediate.  With upwards of 10,000 baby boomers turning 65 each day, the skills and experience flight becomes ever more challenging.

We further predict continued turbulence surrounding global transportation sectors with renewed interest in managed services and B2B network information integration. Industry supply chain teams can no longer view the outsourcing of supply chain logistics and transportation services to be an annual renewal but rather a revisit of required augmented capabilities in services.

We anticipate a new renaissance of supply chain focused technology investment during the 2017 in areas such as integrated business planning, supply chain risk mitigation and advanced analytical decision-making support. We predict increased momentum and interest in Internet of Things enabled industrial and supply chain networks. The new renaissance in supply chain focused tech adoption will lead to further tech vendor acquisitions, some involving well- known names.

We expect existing supply chain sustainability and social responsibility initiatives to continue momentum effort during 2017 despite anticipated Trump Administration efforts to dilute the notions of the effects of global warming. Such initiatives continue to provide economic and brand value benefits and further contribute to the strategic need for an overall sustainable business.

We predict a renewed global battleground for online B2C and B2B platform dominance among Alibaba and Amazon in 2017 with regions such as India being the key areas to watch for influence and added investment. WalMart.com remains a wildcard in the global B2C sector.

Finally, there will be the unique usual industry-specific supply chain focused challenges that are sure to include consumer product goods, commercial aerospace, pharmaceutical and healthcare and other industries.

The above will all be detailed in our upcoming 2017 predictions series. This year we will further augment our predictions series by contributed guest contributions and added podcasts or webinars featuring industry participants. If industry leaders desire to add their voice in our content stream as to what to anticipate, and how to be prepared, please let us know.

The year 2017 will no doubt test the competencies and skills of many across industry supply chains. At the same time, they will provide opportunities for leadership and added innovation to make a difference in achieving line-of-business and overall corporate objectives. The value of the supply chain and the notions that supply chain capabilities do matter have never been more recognized as they are as we approach the coming year.

It will be an interesting year to state the least so stay tuned as we navigate the ongoing developments throughout 2017.

Bob Ferrari

© Copyright 2016. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.


A New CEO for LEGO with an Operations and Supply Chain Management Background

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An area that the Supply Chain Matters blog has focused on since our inception is bringing visibility to how a background in the many functional areas that make-up supply chain management can lead to other senior business leadership roles, including that of the CEO. We, as well as others, have highlighted CEO appointments involving corporations such as Apple, BMW, Dow Chemical, General Motors, McCormack Foods, among others. The key theme often comes down to not only positioning one’s career but also having a deep understanding and appreciation for the linkage of manufacturing and supply chain capability to required business outcomes.

Once again, we highlight another appointment, one involving internationally renowned toy maker LEGO Group, and the recent appointment of Bali Padda as its new CEO. Mr. Padda assumes the top role from former CEO Jørgen Vig Knudstorp who will now head up the new entity, LEGO Brand Group. Business Network CNBC’s byline regarding this appointment of this closely-held company was the significance of the first non-Danish CEO in the company’s history.

Padda’s has been at LEGO for 14 years and his most recent role was that of Chief Operations Officer. Prior roles included Head of Logistics, Head of Supply Chain and Executive Vice President, Global Supply Chain. He joined the Danish company with a customer service and supplier relations management background.

The corporate press release includes a quote from Niels Jacobsen, Chairman of the Board of LEGO Group which provides a great reinforcement of required leadership skills:

Bali Padda has a fantastic record of accomplishment in the LEGO Group with more than 14 years of experience especially within supply chain functions, but more recently also focusing on people and organizational development. Bali has demonstrated an ability to drive the changes required in operations through the significant growth we have experienced during the past years. I am confident that Bali will continue to develop the company in close cooperation with management.”

As many of our readers can well relate, LEGO’s business model is one driven by seasonality of product demand. More than half of the company’s annual revenues are derived during the current holiday fulfillment period. Toy industry supply chains with high seasonality are highly distribution sensitive with inventory and working capital management as key competencies for assuring profitability growth. The company’s new strategic goal is to extend its brand and distribution reach across the globe and has recently opened a new manufacturing facility in China to supply product demand needs across Asia.

Supply Chain Matters extends are congratulations, best wishes and Tip of the Hat Award to new LEGO CEO, Bali Padda

Bob Ferrari

© Copyright 2016. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.

 


New APICS Supply Chain STEM Educational Outreach Program- Consider Getting Involved

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Within our independent research, annual predictions and Supply Chain Matters blog commentaries, we have identified the ongoing challenge for attracting new talent to the various functional needs that umbrella supply chain management.  The need is substantial and extends across all major functions to include procurement, strategy, planning, operations management and dedicated IT support.

There are many multi-industry efforts underway to address the challenge of augmenting mid and senior level leaders and managers, many of which are being led by various supply chain management focused professional organizations along with colleges, universities, and state training programs. However, one of the more gnawing challenges has been in introducing primary and secondary education students to what can be rewarding and affirming supply chain focused careers.

We recently had the distinct opportunity to speak with Cheryl Dalsin, the new Director, Academic Outreach for APICS.  Cheryl’s academic and professional background in one of engineering and material sciences, and her recent career contributions have been with global semiconductor designer and manufacturer Intel.  Her assignments involved technical and engineering program management across Intel’s broad supply chain management initiatives and as she states, where she developed her passion for all activities that umbrella supply chain management today.

Cheryl had volunteered some of her time in helping to attract grade, middle and high school students to consider careers in engineering and sciences. As she states, it all started with devising ways to interest and motivate her own children in sciences at an early age. The volunteer effort included coming up with role play games and activities appropriate for early or later grade students. Noting success with students, Cheryl approached Intel management in 2011 with broader outreach program ideas leading to a joint collaboration among Intel and several universities to create interest for science in K-12 students.

While working in Intel’s supply chain organization, she recognized the same issue, students did not know what supply chain management was and what careers were available across the various functions. That is when she had the idea to brainstorm and collaborate with supply chain focused academic leaders in coming up with similar role play programs that would emphasize the science, technology, engineering, and mathematics (STEM) aspects within supply chain management roles.  Our readers might well recall the MIT Beer Game, which was often used as an interactive role play mechanism to help internal organizations understand the concepts of supply chain planning and forecasting.STEM role plays are based on a similar principle of learning by involvement and role play.

Cheryl subsequently reached out to David Closs and Judy Whipple of Michigan State, James Kellso and John Fowler of Arizona State and Jim Rice of MIT, and together, seven supply chain STEM activities were developed. This team continued to grow this Supply Chain STEM program, with the financial assistance of Intel, eventually reaching upwards of 15,000 U.S. and international students.

The Supply Chain STEM program that was developed provides three activities addressing various grade levels with each introducing students to the supply chain while teaching concepts of science, technology, engineering, and mathematics:

The Lemonade Game (Grades K-5)

The Paper Airplane Game (Middle School)

The Cell Phone Game (High School)

The APICS board of directors became aware of this K-12 outreach program, and in June of this year, Cheryl was recruited by APICS to lead academic outreach.

At this year’s APICS Annual Conference held in September, the Supply Chain STEM Educational Outreach Program was formally introduced.

A goal has been established to reach more than 100,000 students by 2020. APICS provides the tools and resources for program delivery and volunteers are needed to foster interest.  To support that goal, the professional organization is seeking volunteers willing to visit local and regional high school STEM Curriculum Coordinators to introduce them to the APICS STEM program materials along with how these teaching tools can be incorporated into the STEM classrooms. Volunteers are also needed to be on-site instructors for organizations, clubs and community programs that serve youth.

APICS indicates that The Cell Phone Game is available now, with materials and information available for downloading from a specific APICS STEM web page.     

From my lens, this new outreach program is an excellent opportunity for any supply chain management professional to share knowledge and help attract the next generation of talent.  APICS is an excellent choice as an educational delivery conduit, and it would seem to this author that local APICS and Supply Chain Council Chapters should strive to learn more about the program and facilitate local volunteer efforts.

I can state that this author will be reaching out to my local APICS Chapter, as well as spreading the word to local high school STEM Coordinators.  Join me!

Again, further information can be garnered from the APICS STEM Educational Outreach web page.

 

Bob Ferrari

© Copyright 2016. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.


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