This is the second in a series of three posts responding to a challenge among our blogsphere community of supply chain bloggers to offer some thoughts on the seven grand challenges for supply chain management for the next ten to twenty years. The notion of seven challenges was motivated from a recent Gartner research theme that outlines The Seven Great Challenges for IT.
In my part one post on this topic, I outlined what I believe to be the first three challenges:
– Ubiquity of Portable Computing Leading to Sensory Networks
– True Supply Chain Business Intelligence and Decision Making Tools
– Managing the Explosion of Data and Information Needs Involved in Global Based Value Chains
I also narrowed the timeline of these challenges to the next five years, since I believe that that this is the upper limit of the ability of our organizational communities to articulate a meaningful objective, as well as a set of multi-year initiatives to support the achievement of this objective. In this post, the I will outline my notion of next two challenges, which are more focused on supply chain business strategy, namely:
– Managing Supply Chain Risk Management on a Global Basis
– Who Assumes Ownership for the Extended Supply Chain?
Challenge Four – Managing Supply Chain Risk Management on a Global Basis
Many of us have been speaking, writing, and speaking with members of our community about the implications related to the fundamental shifts that are now underway relative to the sourcing of suppliers, material, or production among multiple regions of the globe. Many of the original sourcing decisions were primarily driven by a cost consideration, more than likely perceived savings in direct labor costs in regions such as China or other Asian or Eastern European countries. Today, those decisions have become more challenged with the need to balance market access and customer service to higher growth markets in the developing regions of the globe, with the realities of an era of high energy and global transportation costs that are a reality over the next five years.
This past year alone, stories of product safety, product contamination, and higher levels of natural disasters, terrorism and other risks continue to permeate the headlines. Just in these past few days, the sobering news of Hurricane Ike striking the heart of the U.S. energy and petrochemical related supply chain, financial markets in a potential disarray, product recalls continuing to involve the most fundamental of consumer health and safety related value-chains, have all provided more sobering reminders of the reality of supply chain risk management being a constant given for our functional world. My belief is that over the next five or so years, many supply chain and other industry groups will have to come to realize that this extension of the overall value-chain all over the globe will continue to motivate senior executives to be much more concerned and involved in the understanding, managing or mitigating of risk throughout the value chain.
This challenge is not an easy one, and will require much more collaboration and alignment across multiple functional as well as inter-enterprise groups involving procurement, operations, finance, logistics, and other cross-company and even inter-governmental agencies. The C-suite cannot just delegate this initiative to the supply chain manager, but instead has to be an active champion, advisor, and sponsor. Organizational wide awareness and rational assessment of risk profiles are lacking. While technology will play some role, this is primarily a challenge of organizational and process dimensions. That leads to challenge five.
Challenge Five- Who Assumes Ownership for the Extended Supply Chain?
Many of us have observed and commented on the reality that supply chain management today is more and more related to a broader scope of management and coordination, namely suppliers, production, IT and service partners stretched all along an extended value chain. And while many talk a good game, executive surveys constantly ground us to the reality that functional barriers still hinder many companies in their attempts to overcome challenges for being more agile or responsive to business change, or marshalling resources and systems to better manage these networks. The analogy that sometimes comes to me to describe this current interaction is perhaps an episode of “The Apprentice”, where team members often conspire to make other team members look bad in the eyes of “the Donald” and his board of advisors.
At the same time, I’m sure many readers have noted that current phenomenon of these same functional managers adopting some form of the name of “supply chain manager” I have previously commented on the movement of CIO’s assuming overall leadership of the extended supply chain, and I often observe how current procurement and sourcing management positions are more and more being described with a supply chain management scope of responsibility. This same overlap even extends to the professional organizations that span these functions, with APICS, CSCMP, ISM, and others all converging on similar tracts of education and certification.
Challenge five is in my lens involves manufacturers, retailers actually once and for all coming to the realization of the organizational scope, resources and budget control required for one manager to assume leadership for the entire value-chain. This manager should be adept in the broad understanding business processes, risk management, appropriate deployment of technology, and the scope of information required to make timely and informed decisions. The skill level will, in my perspective, be broad, and encompass product, business, technology and functional scope of strategy and day-today execution. This person will clearly grasp the big-picture, be able to manage overall change among cross-company organizations, and understand that functional lines in supply chain have all blurred. No doubt, he or she will reside very close to the C-suite, and have enormous responsibilities and respect, as well appropriate leadership style. With all due respect to my fellow blogger Michael Lamoureux on Sourcing Innovation, I do not feel that we can target the CEO as the sole czar of the supply chain, since this executive has to be more focused on the total business, and serve as the ultimate check and balance for all that occurs in that business.. Challenge five is an organizational challenge, one that will have to transcend personal lobbying and positioning, with a focus on bold leadership, coaching, and change management. Having a thick skin and a sense of humor would also help.
In the spirit of interchange of ideas, and the power of blogging, I ask readers of this and other postings to comment on the type of leadership style that will be most successful in leading the extended supply chain. I offer two sample contrasts; Bill Belichick of my New England Patriots whose style emphasizes technical fundamentals, individual contribution and consistent execution, or perhaps Duke University basketball coach Mike Krzyzewski, whose style emphasizes the five fundamental qualities of team- communication, trust, collective responsibility and pride. Which style do you feel fits the leadership requirement of your supply chain organization over the next five years?