The following commentary is a Supply Chain Matters guest posting authored by Jim Barnes, Services Managing Director, Institute for Supply Management (ISM).
One of the biggest challenges in our industry is gaining recognition of the value procurement and supply chain management brings to the corporate bottom line. We know supply management increases shareholder value by making business more competitive and more profitable, yet it’s hard to tell the story. The perception is we’re not very strategic but are overly tactical: processing paper, comparing one price against another and policing what other departments order.
To change this perception many in supply management are exploring the option of automating some functions to move away from tactical processing and focus more on strategic interactions with suppliers. Generally speaking, automation can help reduce the number of people doing tactical work; reduce the amount of money needed to do that work; and provide supply management professionals with more time to develop better relationships with suppliers.
There are several factors to keep in mind when considering the option of automation:
- Know which processes can be automated and which cannot;
- Recognize your human resources may not be interchangeable; and
- Realize if you automate a bad process, you’ll just get bad stuff quicker.
Most transaction processes lend themselves well to automation, and there are tools to automate the bidding and RFP processes, too. However, it’s very hard to automate the human interactions in supplier relationships like strategic sourcing and negotiating.
As you automate processes and free up supply management professionals, don’t assume everyone has the ability to move into a more strategic, interactive role with suppliers. At ISM Services, we offer clients the opportunity to survey their supply management professionals to determine if they tend to be more tactical or more strategic. Then we put them through a negotiation exercise where they can learn the difference between the skill sets, the value of both and determine where their strengths lie. Participants learn that many times it makes sense to negotiate as a team with the best combination of negotiating styles to suit the objective.
It’s important to remember that automation on its own is not the answer; you still need to have a good process in place. One of our clients had a highly manual, time consuming process for receiving goods and verifying documentation. When they first automated the process they merely replicated their manual process, and it yielded the same result, a very high exception rate. After spending significant effort to re-engineer the process, they learned to rework and reset the rules to get much better results from the process.
Another problem can arise when departments are automated and outsourced at the same time, or at a later date. For example, supply management professionals who automate their accounts payable and outsource it can run into problems because the new people managing it don’t have the important knowledge of the inner workings of the company. The result, according to an experienced practitioner-friend of mine, is “your mess for less.”
So how do you decide which automation strategy is best for your company and avoid some of the pitfalls? First, determine what you want to accomplish in which departments and then establish the metrics to measure your progress and accomplishments. For example, do you want to take work out of a process? Do you want to eliminate onerous authorizations or unnecessary three-way match requirements? In the end you want to eliminate work of lesser value to the company and instill more strategic practices with your suppliers.
Second, take time to explore your options because there are quite a few available. Talk to your peers to find out what is working for them. Attend conferences and visit the vendors there and try their tools. ISM Services does not recommend nor endorse automation software but we are available to help you evaluate it against your goals.
When managed well, automation can be a game changer in the supply management industry. It can result in more efficient and cost-effective processes and give supply management professionals more time to collaborate and innovate with suppliers. It can shift the perception of procurement and supply chain management from tactical order processor to strategic partner in the C-suite.
A lot of electronic alerts come across the desk of Supply Chain Matters regarding web content focused on key topics and challenges involving today’s supply chains. We only elect to share content that we feel will serve the interest levels of our global based readers.
Thus we recently came across a blog posting on EBN: Talking about Supply Chain with John Kern, Cisco.
EBN Editor-in-Chief Hailey McKeefry recently interviewed the Senior Vice President, Supply Chain Operations at Cisco. This author has heard John Kern speak at prior industry conferences and has spoken with John on past occasions. I find John to be a visionary leader.
In the EBN interview, John articulates the mission of supply chain management- namely on enabling the success of the company strategy. He further speaks to the uniques challenges underway within high tech supply chains, in-particular, customer shifts from capital investments to services investments.
John further articulates Cisco strategies regarding the challenge of demand and available supply of supply chain talent. Pay particular attention to what is defined as the “landing zone”, which is defined as what the supply chain needs to look like in three years in terms of locations, skills, generational mix, roles and leadership.
By our lens, this is an insightful interview and worthy of reading and reflection. Take some time on the beach or in the yard to review it.
Bob Ferrari, Executive Editor
As reflected by many of our prior Supply Chain Matters commentaries, there is a talent management crisis across multi-industry supply chain management communities. The crisis arrived in the environment where the urgency for end-to-end supply chain visibility and informed decision-making has reached a peak requirement. At the same time, the wave of highly experienced baby boomers working within SCM disciplines continues to retire. The supply chain talent and skills need is reflected not only in the need for hiring new talent but in the re-skilling of existing SCM focused professionals.
Earlier this month, Penn State’s Smeal College of Business, an institution with broad recognition for excellence in supply chain management undergraduate and graduate programs, unveiled a new and unique Supply Chain Leadership Academy. This new program, provided in an online delivery model, is unique in that it formulated from the stated needs of Penn State’s corporate sponsors in providing an online boot camp that build upon an existing organization’s internal supply chain expertise and addresses critical new required supply chain management skills.
Supply Chain Matters reached out and spoke to Steve Tracey, Penn State’s Executive Director for Supply Chain Research to learn more about this program. According to Tracey, while current supply chain management focused professionals are knowledgeable and efficient within the various pillars that come under the umbrella of SCM, more and more, corporations seek added skills focused on the various touch points of the end-to-end supply chain network. Additionally, CorpU, which describes itself as a partner with the world’s leading business and academic organizations pioneering new approaches to virtual learning communities, was seeking a well-respected academic partner to fulfill needs in supply chain management education for working professionals. This new boot camp program is the initial product of this collaboration and Tracey noted that interest levels among corporations are very high.
Participants will partake of 6 module courses delivered in 3 week time intervals. Tracey emphasized the design as being cohort based applied learning, addressing specific challenges specific to the individual sponsoring firm. Soft skills such as those related to project and change management as well as internal and external based collaboration are noted as emphasized in this program. Faculty will consist of two noted Penn State professors as well as two experienced practitioners. Average boot camp size is described as 20-50 people. Boot camp graduates are awarded a Professional Certificate in Supply Chain Integration From Penn State.
Supply chain organizational leaders desiring further information about this unique program can review a dedicated CorpU web site page.
It has been a little over a year since the Supply Chain Council (SCC) announced that it would be merged into APICS. The SCC provided corporate and public sector members access to supply chain research and the well-recognized Supply Chain Operations Reference (SCOR) model methodology and benchmarks for evaluating supply chain metrics and performance. Upon its merger with APICS, the organization was renamed APICS Supply Chain Council (APICS SCC).
Today, APICS announced an important milestone related to this merger, namely three different engagement programs that should allow organizations to take advantage and leverage both APICS and APICS SCC benefits. As our readers may be aware, APICS has catered to individual supply chain and operational professionals in their needs for education, certification and career advancement. APICS SCC caters to corporations and service providers in their needs for research, supply chain frameworks and educational requirements.
The three programs announced today, in-capsule, consist of the following:
APICS SCC Affiliate – according to APICS this program offers tiered level benefits depending on an organization’s level of needed participation. Current affiliates are comprised of more than 400 globally based organizations that actively encourage individual APICS memberships for their employees. With today’s announcement, employees gain access to APICS SCC research projects while corporate affiliates are able to sit on the APICS Corporate Advisory Board. Affiliates have the opportunity to take advantage of group training programs or receive discounts to APICS SCC training including SCOR. Premier Corporate, Corporate and Public Sector affiliates gain access to SCORmark Benchmarking consisting of 20 years of accumulated SCOR data. A specific APICS web page describes the Affiliate Program.
APICS One- members are eligible to provide up to 500 employees with APICS enterprise memberships to support individual development needs and the organizational improvement opportunities supported through the APICS SCC premier corporate affiliate category.
APICS Sponsor- companies are provided with a license to utilize and incorporate APICS SCC frameworks and other APICS published material into products, services or marketing materials. The program is further described as offering opportunities for engagements with APICS SCC affiliates, access to benchmark reports, publications and research, as well as tailored marketing opportunities. There are three different tiers of available sponsor participation which are outlined at this APICS web page link.
In a previous Supply Chain Matters commentary we questioned what we felt was the slow progress of the overall merger and combined benefits for both APICS and APICS SCC. Today, the APICS web site has been completely revised and features a new design and feel. These newly designed program offerings should help organizations to be able to take advantage of the combined body of knowledge for both organizations, as well as the ability to provide needed education for different audiences.
This is an important milestone.
We encourage organizations that are engaged with either of these new programs, or are contemplating taking advantage of such programs to let us know your thoughts and impressions. You can email us at: info <at> supply-chain-matters <dot> com.
In our prior Supply Chain Matters posting we called attention to the evolving attraction for leveraging predictive analytics in supply chain decision-making practices which has added to the continued pent-up demand for data scientists. We highlighted a guest contribution indicating that big data and more predictive analytics capabilities can be non-effective if not preceded by a rigorous review in determining if current key performance indicators (KPI’s) and business metrics are actually capturing the true drivers of business outcomes.
During SAP’s recent 2015 Sapphire and ASUG conference, SAP co-founder and Supervisory Board Chairmen Hasso Plattner’s conference keynote touched upon this very aspect, which warrants repeating. He touched upon the notion of the boardroom of the future, not being occupied by reviewing historically based KPI’s but rather “fact-based management.” Hasso described this as a “massive change on how companies manage information” and further, “we cannot hide data anymore”.
That last statement may well resonate with our readers since too often, KPI’s are selected to measure can-do performance areas tied to individual organizational, team and personal bonuses that do not necessarily link to an overall business outcome required for products, processes, margins and/or risks. They are too- often, anchored in past performance coupled to a consensus of what can be comfortably accomplished vs. what should be expected given the industry and business environment. Concerning or bad news can be hidden until it is too late for the business to overcome the effects.
In his keynote, Hasso addressed such a change as “moving from dashboards to active boards.” That is an important and far different metaphor.
It implies continuous and changing analysis grounded in overall outcomes and assumes that business events will indeed be constantly changing and that performance metrics should set both a target and a constant moving analysis of potential outcomes based on various business and product scenarios. Such a moving analysis assumes that organizations and teams can be fluid and flexible, responding to market opportunities, threats or risks in a more proactive and collective manner and in the context of best desired outcomes. It further implies that management is very actively engaged in understanding how the end-to-end supply chain is contributing or detracting from desired and/or expected outcomes. Bonuses and performance are tied to best enterprise outcomes vs. individual outcomes.
Such a change does not occur overnight and will take time to evolve. As noted in a previous commentary, executives need to be granted the broadest end-to-end supply chain leadership and accountability with certain mandates to address existing value-chain challenges and to improve business outcomes. Supporting staff with data science skills, while critical, are not the primary skill need. Knowledge of the business, the end-to-end supply chain, and organizational change management needs to be coupled to data science skills.
In the meantime, we advise supply chain leaders to indeed recruit talent with data science skills, and then rotate these new superstars among various supply chain functional and geographic assignments. Challenge them with local problems and with introducing positive overall change. Insure active mentorship and sponsorship with the end goal being a select group of business analysts that can take on the most difficult challenges while garnering the respect of others.
The June 8th edition of Bloomberg Businessweek features the article, Help Wanted: Black Belts in Data. This article reinforces others brought to reader attention by Supply Chain Matters, that a new techie is in demand across the globe, that of data scientists. The article cites a rather timely McKinsey study indicating that by 2018, the U.S. alone may face upwards of a 60 percent gap between supply and requisite demand for deep analytic talent. Once more, because of such demand, starting salaries are reported to now exceed $200,000. But there are other important and crucial aspects related to the pent-up demand for data scientists, namely that the need relates to both technical as well as organizational change skills.
In August of last year, Supply Chain Matters called reader attention to one of the hottest skills demand areas for supply chain and decision-making focused technology, that being the need for data scientists. We cited a report published by The Wall Street Journal describing the scramble to find talent both experienced data analysis and interpretation skills along with knowledge of customers, markets and business processes. Our takeaway message was that organizations not actively investing in identifying talent needs and nurturing the skills needed to harness such analytics focused technology will not only not be able to take advantage of such capabilities, but may well find themselves with a distinct competitive disadvantage.
We further featured a follow-up Supply Chain Matters guest commentary provided by Joannes Vermorel, Founder and Chief Software Architect at Lokad SAS, a technology provider specializing in quantitative optimization of decision-making needs for supply chain and commerce leveraging Big Data and cloud computing concepts. In this commentary, The Challenges and Obstacles of Big Data and Analytics Applied in Supply Chain and Commerce Decision-Making, Vermorel provided two powerful observational insights; namely that Big Data or predictive analytics efforts only succeeds with heavy support from top management, and that most Big Data focused initiatives suffer from “Naïve Rationalism”, that is, the usage of metrics that look scientific from afar, but that actually fail at truly capturing the drivers of the business. Vermorel’s powerful observations need repeating:
“Most of the Big Data initiatives that I see in supply chain fail short on both points: companies are trying to introducing such innovations without committing themselves to the drastic organizational changes involved; and companies are letting their data scientists, who are mostly clueless about the business, overlook too many critical business drivers because management is not sufficiently involved in what appears to be a very technical undertaking.”
The Businessweek report notes how well respected universities are scrambling to initiate formal academic undergraduate or post-graduate programs concentrating on data science. Summer intern programs involving students with data science skills are reportedly paying $6000 to $10,000 per month.
However the message for both supply chain focused organizations and students needs to include not only the requisite technical skills of data science and analysis, but deep knowledge of value-chain processes, cross-functional program and change management concepts. Finally, before getting carried away with hyper focused recruitment efforts, senior leadership and sales and operations planning teams need to couple any talent management recruiting efforts with efforts directed at actively practicing a deeper understanding of key business metrics that lead to expected business change or changed business outcomes. Launching the brightest data science talents on misunderstood or misdirected decision-making practices is a waste for the candidate as well as the organization.
Finally, we encourage students and graduates seeking to pursue data science careers to further channel their studies toward a deeper understanding of the cross-business and cross-functional aspects of supply chain management in additional to the technical aspects of data.