Corporate United - Fourth Quarter 2007

The Need for New Skills
Today’s supply chain organizations are significantly different from those of ten years ago, requiring a new set and mix of skills. Most companies have significantly changed the processes and structures used within their supply chain functions. Purchasing groups commonly use strategic sourcing, spend analysis and supplier development processes – terms that didn’t even exist fifteen years ago. Logistics organizations are increasingly becoming more and more sophisticated. Today’s logistics professionals commonly use computerized network modeling to design optimal warehousing and transportation networks, and apply bar coding and RFID technology that would seem like science fiction only ten years ago. The size and shape of supply chain organizations have changed as well, and professionals are typically expected to operate in a much more cross-functional environment than was expected in earlier silo organizational models.

Yet through all of these transformational changes that supply chain organizations have created, most still recruit, staff and train resources the same way that they have during years past. This is one of the most limiting factors that keeps supply chain organizations from progressing today. Classic business theory dictates that “form should follow function.” When redesigning business processes, embedding new technology, or changing organizational structures, it only makes sense that the types of individuals that will “drive” this new organization will need to be changed as well. Building and sustaining a great supply chain organization requires attention to four key critical success factors:

• Building The Right Mix Of People

• Designing And Following Through With Targeted Training

• Building A Creative Culture

• Rewarding The Right Behavior

Building The Right Mix
Building a great supply chain organization requires the right mix of people. People are the key ingredient to any successful organization. Benchmark all the best supply chain organizations in the world, and you will find that all of them have great people. However, building the right mix of people is probably the most difficult task that a supply chain organization will face. Since most organizations do not have the luxury of starting from scratch with regard to recruiting and staffing, most have to be creative and disciplined in building the right team of people.

Looking at most supply chain organizations, employees can typically be classified as:

Highly Experienced, Right Skills: These are supply chain employees who have lots of experience within the corporation, the supply chain function, and the right skills (we will discuss the “right skills” later). These people are a rare commodity – worth their weight in gold – and should be developed and groomed for future management opportunities. Do whatever it takes to keep these employees happy and committed to your organization!

Highly Experienced, Wrong Skills: These are supply chain employees who know their way around the organization, understand the supply chain, but do not have the appropriate skills. Give these employees the appropriate training, evaluate their progress, and if the appropriate skills are not developed, help them to find other opportunities. Performance management is the key in this case and must be deployed aggressively; companies today cannot afford to carry poor performers in their organizations, and room must eventually be made for those who want to grow and develop their skills

New Supply Chain Experts, Right Skills: These are new employees to the corporation with a background in supply chain management and who have the appropriate skills. These are typically new hires from other companies or recruits from supply chain academic programs. These people should be the target of most new hiring and recruiting efforts and can add value by bringing in fresh ideas and helping to train others in some of the new skills and technologies available. These resources can eventually be groomed to move into the Highly Experienced, Right Skills category.

Supply Chain Novices, Right Skills: These are typically new hires or rotating employees who are new to the supply chain function, but who have the right set of core skills. If people with the appropriate skills are sought after, they can provide an alternative source of fresh ideas, be trained in supply chain skills and groomed for growth, or go on to other parts of the corporation and become strong supply chain supporters. Many supply chain organizations continually recruit from within the corporation, perpetuating the issue of not having the right skills and/or experience mix within the organization. Although in many companies it is required to post jobs for internal bidding first, we do recommend staffing the majority of new positions from outside the corporation. Not only does this provide a continuous supply of fresh ideas from industry outside your company, but it also allows for a more targeted approach to building the right mix of skills for your organization.

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Determining the right skills mix depends somewhat on the nature of your supply chain organization’s focus (e.g. global vs. national vs. regional supply chain, types of commodities and services purchased, degree of technology enablement, etc.), but in general, the set of core skills remains the same. Most supply chain organizations need individuals that can:

• Lead cross-functional teams

• Negotiate value-based agreements with key
suppliers

• Guide and influence the clients’ overall business strategy, based on total cost of ownership principals

• Design optimized supply chain networks

• Identify cost and quality improvements for clients, using the right analytical tools to evaluate alternatives

• Actively manage supplier performance;
monitoring cost, quality and service performance against organizational standards and goals

• Utilize conflict resolution skills

• Build “key supplier” relationships

• Understand, analyze and forecast complex market and industry dynamics

In November 2000 the Center for Advanced Purchasing Studies (CAPS) conducted a study called “A Skills-Based Analysis of the World-Class Purchaser.” These attributes or skills would allow procurement professionals to improve their capabilities and reach greater potential. This list includes eight skills:

• Interpersonal communication skills

• Team and facilitation skills

• Analytical problem-solving skills

• Technical knowledge

• Computer literacy

• Negotiation skills

• Education and professionalism

• Continual learning

We would add “strategic modeling” and “market analysis” skills to the mix. Overall, many of these are focused on human interaction, relationship and communication, while few of these come as standard packaging in the traditional purchasing employee of the past. As technology continues to remove the transactional aspects of purchasing, the human interaction skills move more into the forefront.

Training
Almost every supply chain department has training goals for their employees. Most however, do not go beyond the establishment of an annual “hours of training per employee” target. In our view, training should be much more than just quantity. Since most supply chain departments start with over half of their employees possessing the “wrong” skills, the only way to change the landscape, aside from mass re-hiring, is through an aggressive, proactive training program. Attributes of an effective training program include:

• Using a Recurring Skills Assessment, typically annually, to determine where organizational skills gaps are. Without a skills assessment, you’re training people on random subjects without a roadmap for measuring success.

• Designing a Training Program, based on the
gaps identified in the skills assessment. Develop training that addresses both core skills (such as those identified above), as well as new processes (e.g. strategic sourcing, supplier development, supplier performance management, etc.). Training forums should be mixed to allow a broad spectrum of learning environments. Typically, core skills training is best conducted through workshops and classroom environments, whereas process training should be conducted through a
combination of interactive workshops and on-the job experiences and coaching. Don’t always rely on trainers or consultants to conduct your training – use them to get started, then assign your “stars” to work with the consultants to take over the role for future training efforts.

• Evaluating progress frequently, through both self-evaluation and performance reviews that are focused on the core skills and process knowledge that you’re targeting. If some of your employees are not getting it, proactively and swiftly help them to move on to other positions in the corporation where they can be more successful.

Building a Creative Culture
The best companies at strategic supply chain
management are creative companies – always looking for better, faster, more efficient ways to manage the supply chain. But building a creative culture is not easy. Often, the ability of a supply chain department to be creative is limited by the corporate culture. Still, there are specific things that can be done to help instill creativity in the supply chain function and hopefully influence your corporate clients in the process. Not only will these help your employees to grow, but it will significantly increase the value that the supply chain department can add to the corporation. Here are some tips for creating a creative supply chain culture:

• Encourage benchmarking – create an expectation that your employees talk with or visit other companies to see which practices work well – both inside and outside of your industry

• Utilize supply chain and industry specific publications to stay abreast of market developments as they relate to new supply chain practices, techniques, and pricing mechanisms

• Invite visits from professionals outside of your industry

• Encourage risk taking

• Use creativity techniques in training and
departmental meetings

• Involve people with no supply chain experience

Rewarding the Right Behavior
Inflation is raising its head again, and economists are predicting average employee raises of 3-4% this year. Does that sound right to you? It should, but rewards and compensation should be well thought out, as satisfied employees add more to the bottom line than you might think. Ultimately, rewarding the behaviors and performance most valued is the recommended strategy, because never forget that you are always competing. Just check out the classified ads, the Internet, even the grapevine. People with the right experience, skills, and attitude are in high demand; and in order to retain those employees and encourage others to move their skills across the value continuum, compensation must encourage the desired behavior.

With regard to supply chain skills development, it all starts with incorporation of the desired skill sets in the personal performance planning process. Then, as compensation is distributed, rewarding the right behavior must be reinforced. Although cash is king, compensation and rewards come in various forms – money, time, recognition, acknowledgment, respect – and all should be leveraged as incentive. Rewards should be tied directly to employees’ ability to demonstrate their mastering of the desired skill sets.

Summary
The new supply chain organization is facing unprecedented demands made upon them by their customers, suppliers, senior management and themselves. While there are many efforts that managers may pursue in their quest to achieve success, few are more important than having the right people with the right skills. A failure to address this issue, correctly and with passion, will be open license for failure. A great supply chain strategy without the people to carry it forward would be like having a car without an engine. Developing the “right” workforce is critical.

About Denali Consulting
The Denali Group of companies has been helping transform leading Sourcing organizations since 1996. The Denali Group of companies includes: Denali Consulting – an innovative boutique consultancy focused exclusively on Strategic Supply Chain Transformation, Strategic Sourcing, eSourcing Program Support, Organizational Development/Training, and Logistics Optimization; SupplyStaff is the leading Supply Chain/Sourcing search and recruiting firm in the U.S., providing both contract and permanent resources; Denali Intelligence provides categoryspecific market research designed specifically for Sourcing professionals.

The Denali Group of companies is certified as a woman-owned business by WBENC.

Contact

Tel: 888-824-8866
Email: info@denaliusa.com
Websites: www.denaliusa.com
www.supplystaff.com,
www.denaliintelligence.com