Women at the Top – A New KPI for Supply Chain

Ar Basan zellikler

This article discussed the talent gap in supply chain, and one of the conclusions was that as the baby boomers retire, organisations need to do more to train and retain individuals with the skills needed for the future.  It does not focus on gender, but clearly the business organisations and policies of the past heavily favoured men getting to the top in supply chain.  The current representation of women supply chain executives in large companies is painfully low, and we know now that having women on the executive team improves organisational performance.  This adds an additional dimension to the talent gap, we need to be looking at more than the total number of candidates or the breadth and depth of their knowledge and skills.  For organisations to be successful, they need women at the apex of the organisation.  So how are we going to do it?

The war for talent didn’t end with the financial crisis of 2008. It just reduced the intensity.  As the world’s large economies start growing again, that competition is heating up.  Supply chain is discouraging entry to the field by women, and is currently excluding almost half of the potential talent pool from ever filling senior positions.  And it is that half that have the skills that lead to better problem-solving and decision-making.  We understand why it happens, but we seem to not accept that addressing it is important.

From the comments on these recent posts, and discussions with colleagues and women in other professions, here is how they see it. Supply chain jobs are often perceived to be:

  • Physically demanding.
  • In aggressive all-male environments, with working hours that are long, unpredictable and may include extended periods away from home.
  • In locations where women feel vulnerable.
  • Managed by leaders that actively or otherwise block women out of the top roles.
  • Roles from which men are promoted even if women get better results.

Furthermore they are:

  • Inflexible to the needs of family life,
  • Poorly paid relative to other professions,
  • In some cultures, rife with corruption.

Our challenge is quite clear:  We need to organise ourselves better.  Physically demanding work can be and increasingly has been mimimised.  Machines do most of the grunt work now.  Aggressive behavior can and should be eliminated.  We need to get creative about how to structure working hours around women’s other commitments and do more to tempt them back into the workforce after starting a family.  And if they do come back, commit to fast-tracking them back up to speed and salary parity with their male counterparts.  If we are asking people to work in dangerous, dirty or sordid situations we should question why and figure out how to do it differently.  Most of all, the one really big thing we can do is get out of their way when making promotion decisions.

Let’s all stop making excuses and start doing something, not least because we will all benefit from doing it.  Our customers will get better value, and all our employees become more valuable when working at a successful company.  Message to CEO’s and Human Resources EVP’s; your new KPI is a target for the number of women at supply chain executive level.  Only numbers above zero are acceptable, and your rewards will increase in line with that number.

Thank you for reading, please do share your thoughts and comments on how we can address this important challenge.

If you want to learn more about the Cosmapec approach to supply chain development, visit us at http://www.cosmapecsupplychainmanagement.com or contact us

About:  Rob Ward has extensive global experience working in supply chain organisations.  He co-founded Cosmapec to help companies and executive teams establish, develop and optimise their supply chains.

Why Are There So Few Women in Supply Chain?

Supply Chain Management

The real question that is exercising minds is why so few large companies have women supply chain leaders.  There is considerable evidence that women bring skills to managerial roles that are under-represented in men.  And having these skills in the executive team measurably improves corporate performance.  The skills in question are ones which lead to better decision-making, and better problem-solving.  Women are more collaborative, are better at coaching and mentoring, and bring a wider variety of solutions to problems than men acting alone.  These skills are vital in executive teams.  Women have been widely represented at entry levels in manufacturing industry for many years, and an increasing number of women graduates are entering other supply chain functional areas.  The pipeline is not empty, so why do so few make it to executive level?  As supply chain managers, looking for every competitive edge, what we do about this is now a critical success factor.

Beyond manufacturing, some areas of supply chain also have an image problem.  Working on trucks, trains, and ships is generally considered blue-collar men’s work.  There are exceptions, but in general women are not falling over themselves to enter the logistics industry.  Because the workforce is mainly male, the working conditions reflect their inclinations to be less concerned by the comfort of their surroundings.  Badly lit truck stops, ports and warehouses are not somewhere women are going to feel comfortable, or safe.  Women view logistics as having long hours, very poor working conditions, with a high threat of assault or serious injury.  In truth there are fewer men now who want this type of job, and indeed it is getting harder to fill these roles in some advanced economies.

This matters, because supply chain organisations generally promote from within, on the not unreasonable basis that those who have experience of working in the industry manage better than those who do not.  In the parts of the industry where a predominantly male workforce is self-selecting, then the incorporation of women into management roles will be hindered by a relative lack of direct experience.  For these supply chain organisations to have the benefits of having women in leadership roles, they will have to find ways to address this.  But even in areas where women are well represented at entry level, supply chain organisations do not promote women at a comparable rate, if at all.  Given that promoting women to executive positions improves corporate performance, somewhere we are getting it wrong: The skills that women bring to improve performance are not the ones that we are selecting for when making promotion decisions.

This is more than just providing equality of opportunity, women are less likely to enter the field from the outset, partly because of the nature of the work.  There is growing competition elsewhere for their skills, not the least of which is their commitment to family life.  Even when they do enter the supply chain, those skills are not appreciated sufficiently for them to be promoted.  As organisations are managed better with women in executive positions, we need to do more to attract them into the supply chain, work harder to retain them, and promote them with greater frequency.  Supply chains will continue to under-perform until we get this right.

Thank you for reading, please do share your thoughts and comments on how we can address this important challenge.

If you want to learn more about the Cosmapec approach to supply chain development, visit us at http://www.cosmapecsupplychainmanagement.com or contact us

About :  Rob Ward has extensive global experience working in supply chain organisations.  He co-founded Cosmapec to help companies and executive teams establish, develop and optimise their supply chains.

Next-Gen Supply Chain Talent – The Collaborative Supply Chain’s Latest Challenge

The supply chain talent gap is a big worry for CEO’s.  Google ‘supply chain talent’ and there are hundreds of articles with the same theme.  At all levels of the supply chain there are unfilled vacancies that are holding back growth.  Many companies know that outsourcing supply chain functions to 3rd party providers does not outsource the responsibility for them.  But it does mean that the in-house supply chain talent pool becomes significantly smaller.  Compounding the problem, as we saw last week, the generation that created the concept of  strategic advantage from organising supply chains from end-to-end is retiring from the workforce.  On top of which, supply chain is seen by many entering the workforce as dull, poorly paid and with limited career development prospects.  

This is interesting from an historical perspective, 30 years ago the concept of supply chain in an industrial setting didn’t exist.  Demand planning was a part of Marketing (yes, really):  Purchasing, Manufacturing and Distribution were separate functions, and Supply Planning was called PPIC and buried deep within Manufacturing.  Purchasing, Manufacturing and Distribution had their own hierarchies and career paths and few stepped outside of the comfort and security within the boundaries of their own disciplines.  Then someone threw a big rock called Manufacturing Resources Planning 2 into the deep pond of inventory that kept these individual fiefdoms afloat.  

MRP2 was built on the earlier Materials Requirement Planning systems, but had an additional capability  that stitched the functions of the supply chain together.  It was the single biggest workplace upheaval that had happened in decades.  Alongside a huge IT effort, virtually the whole organisation had to be trained or re-trained to use it.  On top of this, when complete, the traditional organisation hierarchies didn’t support it, and companies had to develop new horizontal processed based structures to support it.  The concept of the industrial supply chain was born.  And those that thrived and prospered in this brave new world became the supply chain leaders that created supply chains as a strategic advantage.

These leaders had to build on their functional expertise and become knowledgeable in all aspects of the supply chain.  Personally, my first leadership role took me from a process manufacturing supervisor to having end to end control over materials planning, new product development, supply planning, manufacturing, warehousing and distribution planning.  Despite the trauma and pain of the implementations, MRP2 did what it said on the tin, and made step changes to inventory, service and cost management.  

The wave of outsourcing and off-shoring that followed was enabled by this new end-to-end visibility of the supply chain.  But in the process something slipped between the cracks.  That base of functional excellence that resided within the traditional hierarchies of organisations became fractured and dispersed.  The division and specialisation of functions again became entrenched, but this time not within single organisations, but across multiple companies within the supply chain.  Finding people with the expertise to run horizontal processes has become a lot harder.  Few organisations now are vertically integrated sufficiently to do this on their own.  

Although supply chain is now being taught in colleges and universities as an academic discipline, unsurprisingly, recent graduates are not ready to fill managerial and leadership roles.  For those already climbing the supply chain career ladder, the opportunities for cross-functional training have diminished. However an opportunity is emerging.  Collaborative supply chain relationships are now seem as essential to drive strategic advantage.  Somewhat like a marriage, if the collaboration is going to be successful, pooling of  resources demonstrates commitment.  The challenge to develop talent with end-to-end expertise now requires multi-company experience to achieve the required multi-disciplinary skills.  Just as we have developed information-sharing, risk-sharing and profit-sharing between companies as concepts of the collaborative supply chain, sharing the responsibility for talent development will be the next step.  Development plans can no longer stay within the bounds of a single organisation, they need to be cross-company as well.  This is great news for the individuals, the high demand for skills will drive better salaries.  For companies however the challenge will be to retain them whilst they gain the necessary expertise.  Supply chain is about to cast off the dowdy image of low wages and poor career prospects, as companies compete to hire and retain supply chain talent.

Is developing talent a priority for you?  Please do share your experience in the comments section so all readers can benefit from your knowledge.

 If you want to learn more about the Cosmapec approach to supply chain development, visit us at http://www.cosmapecsupplychainmanagement.comor contact us

 About :  Rob Ward has extensive global experience working in supply chain organisations.  He co-founded Cosmapec to help companies and executive teams establish, develop and optimise their supply chains.

Managing Supply Chain Risk – Find the Weakest Links

Triple-A Supply Chains are agile, adaptable and aligned, as we discussed last week, and that makes them less vulnerable to risks.  Triple-A describes what they have become, and not so much how to get there, so let’s look at what you can do to become adept at dealing with an uncertain world.  Risk management is a key part of supply chain strategy, and agility and adaptability are the outputs of the planning and preparation process to manage the disruptions that you may encounter.  So how do you measure up to your risks?

The first place to start is to identify the risks you may face:  Take a look at the Supply Chain Council SCOR Model for classifying risks:

Supply Chain Risk Model

Source: Managing Risk in the Organization Using the SCOR Methodology, Supply Chain Council (2008)

 

If you are not worried by now, maybe you should be.  The key to reducing your worry is planning and preparation.  Here is an 8-point plan to help bring you some peace of mind.

Step 1:  Analyse your Supplier and Materials Base.  Commodity materials available from multiple suppliers are the least risky end of the spectrum.  Specialty materials with only one supplier are at the opposite most vulnerable end.

Step 2:  Review your Manufacturing Base:  Who manufactures your end-product for you, and where.  Again, single-sources are going to be of high concern.

Step 3:  Identify your Logistics Providers:  Look for the points where you move products and materials critical to success through single providers.

Step 4:  Prioritise the Likely Risks:  For each area above, determine the likelihood of it occurring and assess the vulnerability if the anticipated risk materialises.  Highly likely and highly vulnerable will be what you are looking to identify.

Step 5:  Quantify the Impact:  It is preferable to have a $ sign in front of these.  Think in terms of inventory losses, lost output value, lost customer sales.

Step 6:  Develop the Contingency Plan:  Alternatively known as business continuity planning, this details what you are going to do now, and what you are going to do in the event the risk materializes.  Both will have costs associated with them and you need to be able to explain these because your next step is:

Step 7:  Prepare the Cost/Benefit Analysis:  Effectively this is calculating the cost of insuring your customers against your supply chain risks.  Insuring against everything is going to be too costly, leaving too much unplanned for is too risky.  This is the point you have to use your best judgement, and going forward learn from experience.  The collective knowledge of the organisation is an important resource to help you make these calls.

Step 8:  Implement the Measures:  Diversify the supplier base, use multiple logistics providers, have alternative manufacturing locations.  If this isn’t possible, collaborate with the suppliers to produce their own business continuity plans.  Test everyones capabilities, and if you have an in-house action plan developed, train everyone to use it and practice it regularly.

It looks deceptively simple, but there is a lot of work required here.  It touches on every process and functional area within your organisation.  Although the plans are essential, having associates that are prepared is even more important.   The most dangerous risks are those that are unforeseen, and employees who can recognise and react to disruptions are the key to being agile and adaptable.

 

Are you responsible for developing risk management plans?  Please do share your experience in the comments section so all readers can benefit from your knowledge.

 

If you want to learn more about the Cosmapec approach to supply chain development, visit us at http://www.cosmapecsupplychainmanagement.com or contact us

About :  Rob Ward has extensive global experience working in supply chain organisations.  He co-founded Cosmapec to help companies and executive teams establish, develop and optimise their supply chains.

 

 

Triple-A Supply Chains

In 2004 Dr Hau Lee released some surprising research results.  Companies that have low-cost and high-speed supply chains have historically failed to gain a sustained competitive advantage.  Given the huge amount of work that has gone into making supply chains as cost-effective as possible, this was unwelcome news for many.  What he found gave real competitive advantage was a combination of factors that few supply-chain practitioners were addressing.  Dr Lee described these as Triple-A Supply Chains, which were Agile, Aligned and Adaptable.  So what do these characteristics look like in the real world?

Agility, in supply chain terms, is the ability to respond to the unexpected.  It is more than just flexibility, which implies reactions to known issues and possibilities.  Agility also requires alertness to detect when an unexpected change has occurred, and to be able to act with speed to address the change.  Decision-making in an agile supply-chain is fast because the planning systems have been developed to provide regular customer-focused forums on what to produce, and when to produce it.  Agile supply-chains also are prepared for the worst, they keep inventories of low-value items that may become bottlenecks in the case of disruptions.  They have clear back-up plans in case of catastrophic failures to parts of their supply chain, and have multiple providers for key services to minimize vulnerability if one supplier fails.

Alignment behind the key purposes of the organisation is essential.  Supply chains that are developed to meet the needs of the customer first, and are then optimised for cost provide better customer value than those aligned on cost alone.  In practice this means developing a collaborative supply chain, in which all participants in the process are aligned behind creating value for the end customer.  The process must also fairly share the costs and rewards between the different firms that comprise the supply chain.  The keys to successfully aligning the elements centre around information, incentives and performance.  Aligned supply chains are working on the same information, and all the companies involved understand that to improve returns, performance of the supply chain to the end consumer has to also increase.

Adaptability to quickly changing consumer demands or competitive pressures is the last element that distinguishes truly excellent supply chains.  Companies with adaptable supply chains are constantly developing them, retiring parts that are no longer relevant and putting in place new ones that better suit customer needs.  They don’t rely on one single supply chain, and often have multiple ways of serving their customers that are segmented to meet different consumer preferences.  This also adds in resiliency to the supply chain as multiple supply chains can be re-directed to support customers if one element fails.  Out-sourcing of the supply chain parts is also seen as a way of building resilience as it enables rapid switching between different specialist suppliers as customer needs change.

Triple-A supply chains are not necessarily the lowest cost, but as Dr Lee found, cost is not a predictor of competitive advantage.  Supply chains need to be more than just low cost and efficient, they must be both evolutionary and revolutionary as the situation requires.  This is not an information technology challenge, although good data is essential.  Counter-intuitively, it is also not about efficiency.  Instead it is a management and leadership imperative to take charge of the supply chain from end to end, and to be agile enough to adapt and align to new opportunities and threats as they arise.

Are you working towards a Triple-A supply chain?  Please do share your experience in the comments section so all readers can benefit from your knowledge.

If you want to learn more about the Cosmapec approach to supply chain development, visit us at http://www.cosmapecsupplychainmanagement.com or contact usTriple A Supply Chains

About :  Rob Ward has extensive global experience working in supply chain organisations.  He co-founded Cosmapec to help companies and executive teams establish, develop and optimise their supply chains.

Supply Chain Trends: Segmentation Adds Value

Strategy in supply chain is becoming more diverse, reversing the trend for tactics to converge around ‘big’ solutions such as Enterprise Resource Planning (ERP) systems.  Over the last few years the emphasis on driving costs out of supply chain has been changing to one of driving customer value in.  The recent shift from off-shoring to re-shoring is just one example where manufacturing locally supports customers more effectively through increased service levels.  Technology is also creating supply chain opportunities at all levels at an unnerving speed, and new players are responding to customer needs and creating products and services at a pace that can be utterly disruptive to previously dominant suppliers.  Apps like Uber has completely over-turned the logistics of moving people around in cities, and the established licensed taxi systems are struggling to respond. It is hard to imagine that a similar technology will not disrupt other logistics systems.  Indeed, Uber-style apps for parcel deliveries are already in use and being tested by big players such as Amazon.  How are supply chain professionals going to adapt their strategies to cope with these rapidly evolving trends?

The point in any trade between individuals or groups is to maximise value for the seller and buyer, in other words, both get what they want from the transaction.  In the Uber example, it has turned on its head the concept that taxis need to be licensed and controlled.  This safety-driven system severely restricted supply of licensed taxi services and gave the providers a significant pricing advantage at the expense of the consumer.  Uber, by providing visibility and accessibility to private-hire cars has significantly improved supply to the point they are a viable alternative to the licensed taxis.  So the first point in this case is no matter how good your customer value is at the moment, improving it is always essential because eventually someone else will.

The second point is that the reasons taxis were licenced and controlled haven’t gone away either.  Their drivers are background checked and tested to ensure they can drive safely, will keep you safe and (in London) have an encyclopaedic knowledge of the city.  Getting in a Uber car has fewer such safeguards, however they have worked hard to minimise the risks with the technology they deploy.  Licensed taxis do still have customer value, it is not all about cost.  They will however need to focus on that customer value because the Uber genie is not going back in the bottle.  What Uber has done for private hire is to segment and add a supply of services at higher value than their telephone–based service, and which the traditional licensed services were not interested in fulfilling.  Yes the services may not be as safe, secure and reliable, but it is now in the hands of the customer to make the choice and buy what they want, when they need it.  A bold strategy, deployed at an astonishing speed.

Supply chains, are going to face similar revolutions, and not just in logistics as shown by the example above.  Enterprise wide ERP systems are specifically designed to be safe and secure.  They are engineered for repeatability and reliability and will still be needed by many suppliers.  It is hard to imagine how the economies of scale that have driven the significant reduction in real prices for almost all consumer goods could be maintained without them.  However customer value is not just price.  Supply chains also add value by being able to provide solutions for where, how quickly and when the product gets to the customer.  Or by making it possible for them to touch it, feel it and try it before they buy it.  And to fix it if necessary, send it back if they don’t like it, and upgrade it if they want to do more with it.  Who segments to do this best will keep existing customers and attract more.

The mix of solutions that supply chains provide to a business look set to increase rapidly.  Cost reductions will remain a part, but are not the only component.  ERP solutions that take years or even decades to implement are facing some tough competition.

Is your supply chain being segmented or disrupted?  Please do let me know in the comments section, it would be great to hear your thoughts.

If you want to learn more about the Cosmapec approach to strategy, visit us at http://www.cosmapecsupplychainmanagement.com or contact us

Process Integration or Functional Excellence – A Working Example

Last week’s article on the merits of integrating processes or optimizing functions proved to be very popular, with a high increase in traffic to the blog.  One particular question I received deserves further development.  The question asked was, “Could you provide examples?”  So this is a follow-up article to give further insight through a real world scenario from my personal experience in facility leadership roles.  When discussing examples, it is important to understand why the situation developed, because rarely is it the case that it has been done out of neglect or malice, but usually because past events continue to dictate behavior, even if the current reality has significantly changed.

In this particular case, attempting to solve quality and customer service problems associated with a facility start-up in a rapidly expanding market, the management had developed teams dedicated to the individual processes in the facility. They believed that low operational equipment efficiency was the root cause of the problems and were striving to reduce set-up times, minimise unplanned downtime and eliminate rejected production.  Each filling and finishing line had its own dedicated operators and mechanics:  The warehouse, batch processing and quality functions supporting these lines were also included in the process based organisation.  This had clearly achieved its initial aims, quality and customer service were excellent, however costs had run out of control.  The facility had been established to take advantage of low labour costs in the country, but the total costs were now higher than any comparable facility, and productivity as measured by output per labour hour was well below the groups average.  All this in one of the newest and most automated factories in the network.  So what was going wrong?

Multiple reasons were identified, but the over-riding issue was the focus on having dedicated process teams, with no flexibility to move between processes.  The teams were staffed to deal with peak demands, but these happened only on one to two days a week, and demand troughs were 75% lower than the peaks.  This resulted in the highest skilled and highest paid operators doing non-productive work such as cleaning and maintenance for more time than they were making products.  The first step to resolve the situation was straightforward, move work between days of the week to smooth out overall labour demand.  The second was to return to a functional organization with mechanics and operators in separate teams, and the supporting groups were restored to traditional departments.  As part of this change, each group was re-trained to be able to work across several different processes.  The net effect was to reduce headcount by between 25 and 75% in each functional group as a result of these two changes.  The third change was to increase the productivity element in the annual bonus calculation and this further incentivised the new functional groups to work together in the new organisation.

To add a little twist to the tale however, once this had been achieved it was again found necessary to split the workforce into a process organization, but based on two groups of processes rather than individual processes.  One group was mostly semi-automatic processes, and required high staffing levels of mostly unskilled labour, however the second group of processes required highly skilled mechanics, filling line operators and batch processors.  This allowed further control of costs by focusing skilled workers only on those processes that needed them.  Knowing that a functional organization structure often leads to communication difficulties between the different functions, the factory was also re-engineered to establish kanban based control of material flows.

Functional excellence or process integration is in some ways a false distinction, the real question is have we organised the work to add maximum value at the best cost, and understanding that is the key to success.   The example outlined above was not an overnight change to the organisation chart, it took two years to complete.  It affected the working processes of the entire facility, and some of the management team and the process operators decided to leave rather than complete the journey.  But it was highly successful and the facility is now one of the most productive in the group.