So what’s changed to make Supply Chain such a critical function?

May 27, 2013

Why Supply Chain, and Why Now?

Because I have over 30 years experience in recruiting and more than 12 years specifically recruiting in Procurement/Supply Chain, I’ve seen a great deal of change in what companies are looking for across many industries within this particular sector.  And the reason we’re thrilled every day to be recruiting experts in this very vertical – is because Supply Chain Management has emerged as one of the most important strategic functions of some of the largest Fortune 500 companies, start-up entrepreneurial firms (like alternative energy for example) as well as mid-cap, Retail, Wholesale, Consumer Goods, Government/Public Sector and Manufacturing. Supply Chain has certainly earned its stripes.

So what’s happened to make Supply Chain Management one of the hottest career trends in North America and Canada in particular?

In the early days, before the term “Supply Chain Management” emerged as a holistic description for all the functions required to bring a company’s product to market, Logistics, Procurement and Operations were more ‘siloed’, related but separate functions. And many of the largest companies didn’t have unified Strategic Sourcing groups to manage cost-savings across their entire organizations. Each individual business unit or group would handle their own procurement for example, so companies would source from everywhere, without any unified best practices or strategy with the benefit of full company cost benefit savings in terms of Procurement for one example.

Those in Supply Chain traditionally were traditionally those individuals who primarily rose through the ranks from blue-collar roles without post secondary education. Many of these roles used to be very transactional and not strategic. This image has persisted to this day, despite the dramatic changes that have been happening in the field. Here’s what I mean: Say you ask someone off the street what they think of when they picture a Supply Chain or a Logistics Manager. They’re likely to describe a blue-collar worker on the shop floor, and NOT someone in a suit in a conference room interacting with customers, making presentations and involved in making strategic decisions that go right to the bottom line. But today, that’s exactly what someone in Supply Chain is all about. It’s White Collar and very much  an integral part of the corporate culture of any company.

So what’s changed to make Supply Chain such a critical function, and why is it only now taking its rightful seat at the boardroom table?

For one thing, the global economy has changed. The world is a much more competitive place and how companies bring their products to market and how sensibly they procure what they consume is critical to keep them at the top of the food chain. The term “Supply Chain Management” was coined in 1982 by consultant Keith Oliver. It’s no coincidence that the advent of this new term coincided with a number of technological and economic developments. Around that time, westerners were becoming aware of the bourgeoning manufacturing powerhouses of Eastern countries like Japan, China, and South Korea. International trade restrictions were being abolished, and companies were looking to leverage better communications and transportation networks to outsource labour and manufacturing costs to other countries. All of a sudden, it was possible to source raw materials in one country, assemble them into a product in another, and then ship the finished product back to the west, all more cheaply than it would have cost domestically. Big change…This had an immediate  negative impact on domestic manufacturing jobs, but the upside was that there was a new demand for highly skilled professionals who were able to manage the increasingly complex process of bringing products to market.

This economic change, combined with new and sophisticated information technology for analytics and forecasting, made Supply Chain Management a function that was now seen as strategic, analytical, and holistic, and no longer transactional.

The economic downturn of 2008 that followed the U.S. financial crisis pushed an even stronger focus on the importance of Supply Chain: on efficiencies, and the true importance that a strong Supply Chain can have to a company’s health. When companies can’t make money through increased revenue (as many have found harder to do in recent years), they have looked inward to be more efficient.

After such a large contraction in the global economy, companies have realized that the best way to improve their bottom line is through smart, efficient cost savings, and that’s where Supply Chain plays such an important role. Supply Chain is now a crucial strategic aspect of a company’s bottom line.  

But as we mentioned in our recent Guest Blog post on Bob Ferrari’s Supply Chain Matters, the increased importance of Supply Chain Management within organizations has been met with a critical shortage in talent. On the senior end of the spectrum, the field is facing a huge swath of baby boomer retirees over the next ten or so years. Companies need to rightfully be concerned about where they will find the right individuals to fill these talent gaps. A good proportion of these immediate and ongoing talent deficits (while new talent is trained and floods the market) can and should be managed by those highly skilled contract “super-temps” – It is clear that contingent staff for example is certainly a great strategic cost containment tactic and the wave of the future in SCM staffing.

As for staffing on the junior end, companies need to embrace high potential young people with an interest in SCM and should do what they can to make these same people well aware of the immense possibilities that the field has to offer them.

Secondary and Postsecondary schools need to rise to the challenge. They need to explain to their students that Supply Chain Management is both important and a stable and lucrative career choice, and they need to be able to provide the academic training that employers are increasingly looking for. And as Supply Chain Management recruiters, we live and breathe this issue every day.

Over and Out for now

Bronwen

bhann@argentus.com

 

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