There are lots of business and social media commentaries that are describing the current period of high business uncertainty across the globe. The continued escalation of deep recession concerns involving the Eurozone countries and its impact on emerging market economies such as Brazil, China and India are certainly top-of-mind. Speaking of China, will that country’s individual consumers and business contract spending because of uncertainty in the global economy? Concerns also extend to the U.S., and whether a period of previous resurgence id waning, given the realities of dysfunctional political leadership climate.
Something else is also happening, one involving global climate change. A litany of natural disasters, extraordinary storm activity, crop failures and drought are impacting or will eventually impact various industry supply chains. Readers only have to click on the category of “supply chain disruption” on our Supply Chain Matters search topic panel to ascertain the increasing frequency of disruption.
In times of crisis and uncertainty, businesses often undertake a “bunker” mentality. The C-Suite calls for all forms of cash preservation related strategies where there are calls for significant cuts in overall spending and inventory while capital outlays and strategic investments are put on-hold. Additionally, important business process or organizational change management initiatives are often placed in an on-hold or suspended status. The supply chain has naturally been a significant recipient of these directives because supply chain activities represent significant portions of direct and indirect cost. It is no surprise, therefore, that multiple quantitative surveys of supply chain organization conducted in the past five years have often pointed to the reduction of overall supply chain costs as often included as one of the top three goals.
Today, I had the opportunity to catch-up and chat with Mickey North Rizza, who recently joined sourcing and procurement technology provider BravoSolution. Readers should recall that Mickey was a highly visible and respected sourcing and procurement industry analyst at AMR Research, now Gartner. We talked about the current business, economic and consequent supply chain climate and Mickey also reiterated the importance of senior Procurement leaders to rise above the tendency towards heads-down cost-reduction efforts in either direct or indirect spending buckets. Mickey speaks to the practice of “procurement value”, how procurement becomes a strategic partner and enabler for the business. This message is timely and deserves reinforcement, not only for leaders of procurement, but also other supply chain leadership roles.
Making a bigger impact in times of business challenge involves having a solid understanding of the financial statements of your company, and how supply chain strategies, capabilities and activities will impact both the required top and bottom-line results. The implication is a broader and more detailed understanding of the strengths and potential vulnerabilities of all product supply chains. There are evidence points that some organizations may have cut too deep in previous periods of cash preservation, only to suffer the consequences in later quality and process snafus that added far greater costs. There is also evidence that some organizations took the necessary bold steps to seize market opportunities or industry market share through a detailed understanding of their industry markets and supporting supply chains.
In some cases, leadership may involve a management skills shift, involving more emphasis on business strategy, risk mitigation and change management vs. day-to-day operational and fire-fighting. In today’s footprint of globally dispersed and complex supply chain processes, it certainly involves a good understanding of today’s more advanced technology choices and their contribution to productivity, lowered costs, better insights and more informed decision-making. It clearly involves broader collaboration among supply chain functions and externally focused teams, particularly business planning and procurement. It implies deeper collaboration and partnerships with key suppliers, who may also be navigating difficult times and require help and assistance. It is rather important that supply chain capabilities move forward, rather than backward, and that requires that procurement leaders have the ability to communicate in the language and in the context of the C-suite.
The takeaway for readers is that challenging times require broader based management skills, coupling deep functional management skills with complementary strategic, analytical analysis, cross-business collaboration and business understanding skills. Be prepared and take the necessary steps to augment your skills, since challenging times remain across global supply chains.