Supply Chain Matters has previously called attention to executives with supply chain focused leadership experience ascending to higher levels of senior management. Our last commentary of this nature focused on the ascendancy of Mary Barra as CEO of General Motors.
Now, BMW joins such ranks with the announcement that Harald Kruger will take over as CEO in May 2015. BMW’s current CEO Dr. Norbert Reithofer will step down from the CEO slot a year earlier than planned, because of upcoming changes in German law related to the composition of Supervisory Boards.
According to a BMW Blog posting, Kruger stood out as the most likely board member to step- up and take the reigns for the next era of leadership at BMW. In its announcement, BMW indicates that Reithofer would move to head the supervisory board of the auto maker, while production executive Harald Krüger would become the BMW’s new chairman.
Similar to the prior background of Mary Barra, Krüger is an engineer by training, and his previous background within BMW includes roles within manufacturing, product planning and management as well as human resources. A review of his CV of indicates that he began his career in the Technical Planning and Production division and from 1993-1995, worked as a project engineer for plant assembly at the Spartanburg South Carolina production facility. From 1997-2000, Krüger was the head of the Strategic Production Planning department in Munich, and served later positions as Director of Engine Production in the UK and Director of Technical Integration. He he was also responsible for brand management of the MINI, BMW Motorrad and Rolls-Royce brands. Since April of 2013, Krüger has served as Director of BMW Global Production.
According to reporting by The Wall Street Journal, Krüger at 49 years old would become the youngest CEO of any major car maker and signals a “generational change” for BMW leadership. That was obviously another criteria.
Once again it is great to observe that those who served under the umbrella of supply chain, manufacturing or product management operations can have a path for becoming CEO.
These are executives who know that supply chains do matter.
Report Card on Supply Chain Matters 2014 Predictions for Industry and Global Supply Chains- Part Two
We continue with our series of postings reflecting on our 2014 Predictions for Global Supply Chains that we published in December of last year.
Our research arm, The Ferrari Consulting and Research Group has published annual predictions since our founding in 2008. We not only publish our annualized ten predictions, but scorecard the projections as this point every year. After we conclude the scorecard process, we will then unveil our 2015 annual projections for industry supply chains.
As has been our custom, our scoring process will be based on a four point scale. Four will be the highest score, an indicator that we totally nailed the prediction. One is the lowest score, an indicator of, what on earth were we thinking? Ratings in the 2-3 range reflect that we probably had the right intent but events turned out different. Admittedly, our self-rating is subjective and readers are welcomed to add their own assessment of our predictions concerning this year.
In our previous Part One posting, we score carded 2014 Projections One and Two.
A year ago, U.S. manufacturing activity as depicted by the Institute of Supply Management (ISM) PMI Index was recorded as 4.2 percentage points higher than the beginning of the year, and 6.2 points higher than the June reading, representing both the highest reading since June of 2011 and increased momentum from other geographic areas. As of this writing, the ISM PMI reading of 59 percent for October represented a 7.7 percentage point increase from the reading reported for January. Throughout 2014, U.S. supply chain related activity has continued on a steady state. As of October, 16 of the total 18 tracked industries were reporting growth momentum.
As noted in our original prediction, the continued growth of U.S. manufacturing comes from a number of factors not the least of which have been the ongoing double-digit increases of labor costs in China, increased positive momentum of the U.S. economy and more attractive energy costs throughout North America. . In mid-August, the Boston Consulting Group noted in its report, Shifting Economics of Global Manufacturing, that in some cases, the shifts in relative costs of manufacturing among China and North America are now startling placing Mexico as cheaper low-cost manufacturing alternative.
Specific efforts by Wal-Mart and other retailers and manufacturers concerning significant long-term commitments for sourcing products in the region have helped as well. The most significant development in 2014 concerned hefty manufacturing investments in Mexico, both in supporting North America product demand and as a strategic base of North America based exports to other global regions, particularly for the automotive industry. Automotive OEM’s BMW, Honda, Mazda, Volkswagen’s Audi Group, and a partnership among Nissan and Daimler had each announced Mexican production sourcing decisions that amounted to billions of dollars of investment.
However, continued U.S. sourcing of U.S. and North America manufacturing continues to uncover gaps in globally competitive component supply chain networks, many of which still reside in Asia or China. This is especially the case in high tech and consumer electronics, footwear, apparel and other industries. Continued momentum is thus increasingly dependent on further re-building of North America based supply ecosystems among multi-industry supply chains.
Our prediction declared that supply chain and manufacturing talent acquisition and retention would remain a challenge with considerable joint industry, government, academic, and indeed individual supply chain organizational work to be accomplished. We further predicted that some progress will be made with more innovative approaches and efforts and we had hoped to highlight these throughout the year so other teams can benefit.
In the 2014 Chief Supply Chain Officer survey report conducted by SCM World, supply chain leader respondents pointed to ever more challenges in building and managing supply chain teams over the past two years, nearly double the frustration expressed in 2011. SCM World points to raw recruitment as the most cited problem despite rising interest in supply chain among universities and significant investment in supply chain focused professional organizations. The need for well-rounded generalists possessing broader supply chain functional, business and team collaboration skills seems to remain an important need, with implications for significant job rotation across business areas. Other executive and industry surveys conducted during 2014 further reinforce building concerns and frustrations regarding talent selection and retention. In August, we highlighted for readers and clients what executive recruiter Hiedrick & Struggles described as the white hot demand for supply chain executives in pharmaceutical industry settings.
Throughout 2014, we searched for continued insights and learning regarding successful ways to approach talent management. We were able to highlight some learning regarding the management of millennials. We noted how professional organizations such as APICS and CSCMP were adding young professional mentorship and global-wide student completion programs to boost career interest in supply chain management.
Although we feel we made good on a relative no-brainer prediction, we did not meet our expectation to provide added industry-wide learning in successful talent management. For this reason, we lowered our self-rating for this prediction and commit to re-double our efforts in 2015.
This concludes Part Two of our report card on our Supply Chain Matters 2014 Global Supply Chain Predictions. Stay tuned as we assess the remainder of our 2014 predictions in follow-on postings.
©2014 The Ferrari Consulting and Research Group LLC and the Supply Chain Matters blog. All rights reserved.
In a May 2014 Supply Chain Matters commentary, Recruiting the New Era of Retail and Online Fulfillment Leaders, this Editor made the following statement:
“In this era of online retailing and Omni-commerce, there are two leadership competencies that will differentiate tomorrow’s executive leaders in retail. They are a deep understanding of social-media fueled marketing and Internet focused retailing, and a deep awareness, understanding and appreciation of end-to-end supply chain inventory deployment and fulfillment capabilities. From our lens, recruiting for retail C-level executives has been too focused on classic merchandising, finance or traditional brand marketing.”
Our commentary at that time reflected on business media reports indicating that major retailers such as JC Penny, Target and others were finding it difficult to recruit a qualified CEO.
Now, more than seven months later, it is important to reflect on what is occurring, namely that some retail industry CEO selection teams now weigh operations leadership experience over that of pure merchandizing.
In late- July, Target, for the first-time in its history, brought in former PepsiCo executive Brian Cornell as its CEO. Before accepting the Penny CEO role, Cornell had prior experience in leading PepsiCo’s Americas Food business unit and the Sam’s Club warehouse business for Wal-Mart stores. Cornell is now in the process of re-evaluating all of Target’s operations and supporting processes.
Also in late July, Tesco recruited Dave Lewis, a 28 year executive veteran of Unilever as its new CEO after first-half profit trailed the grocer’s expectations. Lewis previously led the expansion of one of Unilever’s fastest-growing businesses, and was the first outsider CEO hired by the UK retailer. Lewis’s leadership experience included the chairmanship of U.K. and Ireland business and president of the Americas operating units at Unilever. When the Chairmen of Tesco was asked why that retailer sought with Lewis, he stated:
“If you look at what Dave Lewis brings, David is absolutely the leader in brand management and brand identity, communication, customer development, customer management. Tesco is not short of retail skills.”
Last week, JC Penny finally selected its new CEO designate. In its reporting, The Wall Street Journal lead-in to the announcement noted that Penny elected to go with strength in nuts and bolts retailing rather than flashy merchandising. Former Home Depot and Target operations executive Marvin Ellison will ramp into the CEO position by August of 2015 after a several month transitional period as President. After the disastrous episode when former Apple retail executive Ron Johnson brought the retailer to near financial disaster with a $4 billion hit in revenues, Penny’s directors are opting for a longer ramp-in for its new CEO designee. Ellison will serve under the stewardship of Myron Ullman, who was brought back to save Penny in April of 2013.
Ellison’s accomplishments include 15 years at Target before joining Home Depot, where he held roles in global logistics and vice president of U.S. stores. Ellison was reported to have helped to integrate Home Depot’s e-commerce operations with brick-and-mortar stores, namely implementing the buy online and pick-up in store initiative.
Regarding the JC Penny CEO selection, the WSJ provided the following commentary:
“The appointment also reflects a broader shift in retail in which some big companies have favored detail-oriented operators over executives mainly lauded for brilliance in merchandising, as the industry faces giant new challenges in managing its supply chains and keeping customers from defecting to the web.”
Certainly, each retailer requires different leadership skills at a point in time, and operations experience may or may not be favored. However, the evidence from above indicates that for those retailers who have especially struggled with the impacts and ramifications of today’s Omni-channel retail environment and permanent structural shifts in retailing are opting for proven operations leadership.
Sales and operations, supply chain and customer fulfillment professionals in retail industry environments should take note that this now building evidence of value in operations leadership will hopefully continue for selecting next generation retail leaders.
Keep that in-mind as the next several weeks bring the usual doses of operational realities.
Supply Chain Matters extends an enthusiastic Tip-of-the-Hat to supply chain and operations professional association APICS Supply Chain Council for its efforts in sponsoring, what we believe to be as the first international student case study competition in supply chain management. This competition has involved 166 university teams from around the world, consisting of 4-5 students per team, competing on their knowledge and enthusiasm in the broad topics related to supply chain management.
Six international team finalists will join a United States contingent of 6 finalists to compete before a panel of judges in the final competition being held at the upcoming annual APICS conference on October 19-21 in New Orleans. The final awards ceremony is scheduled for October 21 with the top ranked teams awarded scholarships.
This is a great activity and deserves praise. It not only helps to foster the development of our next generation leaders for our broad supply chain community but it will encourage added interest and enthusiasm for students to consider a career in our field. Once more, the listings of teams representing their schools and universities that are participating in this competition are names that perhaps many of our global readers and supply chain organizational leaders may not be all that familiar with. Universities from China, Egypt, Pakistan, Peru and Vietnam, to name but a few, elected to participate in this team competition. Some of the academic names certainly surprised this author. A representative listing can be viewed within an APICS Supply Chain Council news release.
Supply Chain Matters extends our added shout-out best wishes to all of the teams that have competed thus far and to those teams who have made the final list of team competition in New Orleans. Good luck and best wishes to each of you.
We plan to publish the final results for this team competition, to be categorized under our Distinguished Supply Chain Management Professionals search category, after they are announced.
Founder and Executive Editor
Supply Chain Matters has previously alerted our readers among multiple previous postings to the red hot demand for both experienced supply chain professionals and executive leaders. (Search on the term: ‘talent management’ in our Categories section in the right-hand panel). While such demand for supply chain talent extends across multiple industry settings, the needs for highly experienced supply chain leadership within the pharmaceutical and medical device sector are especially growing.
Premier executive search firm Heidrick & Struggles today acknowledged the “white hot demand for supply chain executives.” The executive search firm appointed Carlos Garcia an added Partner within the firm’s Supply Chain and Operations Practice. Mr. Garcia’s concentration will be on building a practice in the pharmaceutical, biologic and medical device industry sector. The appointment is described as a new strategic talent initiative for this executive search firm.
It is gratifying to again observe the continued demand for experienced supply chain executives. Let us hope that C-Suite and specialty executive search firms targeting pharma and medical supply chain executive needs understand that the best leaders for taking this industry forward may well come from leaders with proven experience from other industries that have overcome complexity, cost burdens and partner dysfunction across the extended supply chain network. Such successful leaders believe in building a cross-functional talent base with multiple industry experience, perspectives and learnings that can be successfully applied to healthcare delivery.
Amid the growing evidence of needs in supply chain and customer fulfillment management, students about to enter their new university academic studies may want to seriously consider a concentration in this area.
Tomorrow, this author will be joining a distinguished compliment of speakers at the 7th Annual Supply Chain Management Summit sponsored by Bryant University and Benneker Industries. This event is turning out to be one of few premiere New England regional conferences focused on current issues and learning in supply chain management. Last year’s event drew upwards of 250 attendees among many industry settings.
Since many of our readers are located across the globe, the purpose of this Supply Chain Matters commentary is to summarize the key messages and takeaways of my talk.
My presentation is titled: New Developments in Supply Chain Technology- What to Consider in Your Supply Chain Investment Plans. The key takeaway messages I’ll be delivering is that three converging mega-forces:
- Constantly shifting customer and business needs requiring sense and response, as well as more predictive business processes and decision-making capabilities.
- Supply chain process and IT technology convergence providing more cost affordable opportunities for integrating both physical as well as digital information and decision-making capabilities.
- Digitally enabled manufacturing enabled by the Internet of Things.
are aligning toward extraordinary opportunities for what has long been the Holy Grail of our community, namely, integrating information and decision making across physical and digital supply chain spectrums. The alignments of the above mega-forces are providing significant opportunities in management alignment and top management sponsorship which can be leveraged. New and emerging technologies, especially engineered systems, cloud computing, predictive and prescriptive analytics are becoming the technology catalysts. Besides touching upon the latest advances and significantly changed IT market dynamics surrounding supply chain technology, my primary goal in this talk will be to advise supply chain teams on the most important investments to focus upon in the coming months and years.
First and foremost, and without question, the most important initiative for any supply chain organization today is a concerted set of initiatives directed at Talent Management. The business benefits of advanced technology are marginal without people who have the necessary and required skills to be able to leverage and harness these technologies. Recruitment, retention and increased skill needs are constantly identified as the single biggest challenge across C-level, business, IT supply chain and manufacturing teams, and the challenge will continue as newer technologies make their presence among industry supply chains.
More than ever in the past, supply chain, procurement, customer fulfillment, product lifecycle management and service management teams must have active technology awareness and planning strategies. The umbrella and accountability of the supply chain now involves far broader dimensions of common information and related decision-making needs. The notion of the goal for pursuing Integrated Business Planning is not just IT vendor hype, but a necessary and required capability. An organization’s Sales and Operations Planning capability is thus the most critical to focus and improve upon. That stated, an important reminder for cross-functional and cross-business remains that final objective is not technology alone, but rather required business objectives and outcomes.
I’m also urging technology selection teams to broaden their context of their technology planning to include leveraging information and decision-making capabilities across an end-to-end, value-chain and B2B business network. With today’s pace of business change, supply chain planning or forecasting can no longer stand-alone as a capability, and must be augmented and synchronized with the sensing of actual events occurring across the supply chain network. The good news here is that the supply chain technology market has shifted its emphasis toward broader support capabilities in this area.
For those who plan on attending tomorrow’s Summit, I look forward to meeting and chatting with all of you regarding your organizational and personal objectives. For those unable to attend, be advised that next week we will post a PDF copy of the presentation in our Supply Chain Matters Research Center for complimentary reader downloading. Minimal registration information is all that is required.
As always, give as a call or contact us via email if you require further assistance or if this type of presentation can assist your organization or forum in setting its supply chain management objectives for the coming year. Our home page can be accessed at this web link.