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The Rising Importance of Global Supply Chain Management

By Megan Doyle

This is no longer your father’s global supply chain management.

Today, as a veteran supply chain management consultant notes in a CFO.com article, costs, revenues, and profits are all directly tied to effective global supply chain management – as is keeping customers satisfied by delivering finished products on time.1 And it seems the importance of global supply chain management is only growing – the U.S. Bureau of Statistics estimates a 26 percent growth in logistics between 2010 and 2020.2

 

What is more, digital transformation is sweeping through supply chains, too, just as it is in most aspects of the global economy. And, also as it is in other aspects of digitization, talent is a critical challenge: According to a recent report by Accenture, a majority of global supply chain managers are aware of the potential value that digitization can provide but “many are struggling with adoption and building the digital workforce.”3

 

Mind the Global Supply Chain Management Skills Gap

 

While the increased use of digital technologies to enhance global supply chain management is a major factor increasing the need for highly skilled supply chain workers, other factors are also involved. For example, the costs of freight and raw materials are increasing.4 According to many businesses, rising fuel and transportation expenses can cut into profits, and passing higher costs to customers is not always a desirable alternative.5

 

These price increases can make global supply chain management leaders more concerned with allaying costs and potential supply chain disruptions. And this is on top of already managing new technologies and the expanding scope of supply chain management responsibilities.6 According to experts, “there is a huge emphasis being placed on finding talent” than can not only negotiate and enhance savings, but has the ability to grapple with the increasing scope of supply chain management.7

 

According to the director of supply chain for the Association for Healthcare Resource and Materials Management, “the supply chain is in the midst of a renaissance, driven by the realization that to remain competitive, organizations need a supply chain leader with unique qualifications that were not needed 15 or 20 years ago.”8 Today, well educated supply chain professionals – with skills in information technology, project management, engineering, cost accounting, system integration, innovation, troubleshooting, understanding cross-cultural issues, and “the ability to bridge and build strategic relationships and an expanded big-picture perspective” – are highly sought after.9,10

 

The sudden growth in supply chain systems has led to a skills gap and, in turn, a shortage in global supply chain management professionals, according to a 2017 report by DHL.11 As such, businesses are beginning to pay far more to get the skills they need.

 

Salaries for global supply chain management teams have grown consistently in recent years, rising 4.1 percent in 2017 – a rate that surpassed broader wage gains in the U.S.12 And, according to the Institute for Supply Chain Management, “salaries could rise even faster in the coming year as businesses grapple with inflation” and the changing relationships between the U.S. and its key trading partners.13

 

Shifting Roles in the Supply Chain

 

Within the last few decades, business sectors from automotive to retail and consumer goods have “come to realize that their supply chain is much more than the cost of getting products into customers’ hands,” notes McKinsey & Company.14 In other words, modern global supply chain management systems are no longer primarily focused on logistics. Now, supply chain managers consider the need for careful planning, value-adding activities, and information sharing throughout the entire process, from raw materials to final distribution.15 This more holistic approach has led to a move away from traditional cost cutting methods and toward an emphasis on closer connections to the customer, and increasing sales.16

 

New Technologies Enhance Supply Chains

 

The digitization of the supply chain may be catalyzing the transformation of supply chain management from its previous behind-the-scenes role to a front-facing, critical component of doing business. Accenture notes that new technology – such as artificial intelligence, big-data analytics, machine learning, blockchain, and drones – has the potential to alter the face of global supply chain management by reducing complexity, accelerating responsiveness between supply chain processes, and reducing the overall time it takes between acquiring raw materials and delivering a finished product to a customer.17

 

And this new technology seems to be working. According to McKinsey, on average, “companies that aggressively digitize their supply chains can expect to boost annual growth of earnings before interest and taxes by 3.2 percent – the largest increase from digitizing any business area – and annual revenue growth by 2.3 percent.”18

 

The

Takeaway:

More and more aspects of life are becoming digitized, and supply chains are no exception. New technologies are being engrained into global supply chain management systems, the breadth of such systems is expanding, and salaries for highly qualified supply chain professionals are increasing in response. The significance of effective supply chain management appears to be on the rise.

Megan Doyle - The Author

The Author

Megan Doyle

Megan Doyle is a business technology writer and researcher based in Wantagh, NY, whose work focuses primarily on financial services technology.

Sources

1. “Add Supply Chain Expertise to the C-Suite,” CFO.com; http://ww2.cfo.com/supply-chain/2018/04/adding-supply-chain-expertise-c-suite/
2. “Report: Supply chain staff shortages may reach crisis by 2020,” Supply chain Dive; https://www.supplychaindive.com/news/report-supply-chain-staff-shortages-may-reach-crisis-by-2020/447959/
3. Drive your own Disruption: Is your supply chain in sleep mode?, Accenture; https://www.accenture.com/t20180511T020528Z__w__/us-en/_acnmedia/PDF-78/Accenture-Is-Your-Supply-Chain-In-Sleep-Mode.pdf#zoom=50
4. “Paying More to Save More: Companies Boosting Salaries for Supply-Chain Executives,” The Wall Street Journal; https://www.wsj.com/articles/paying-more-to-save-more-companies-boosting-salaries-for-supply-chain-executives-1526667098
5. Ibid.
6. Ibid.
7. Ibid.
8. “The Rising Influence of Supply Chain Management,” HHN Mag; https://www.hhnmag.com/articles/7325-the-rising-influence-of-supply-chain-management
9. Ibid.
10. “Key competencies & skills for new-era supply chain managers,” Morgan McKinley; https://www.morganmckinley.ie/article/key-competencies-skills-new-era-supply-chain-managers
11. “The Supply Chain Talent Shortage: From Gap to Crisis,” Air Cargo News; http://www.aircargonews.net/news/business/single-view/news/dhl-warns-of-supply-chain-talent-crisis.html
12. “Paying More to Save More: Companies Boosting Salaries for Supply-Chain Executives,” The Wall Street Journal; https://www.wsj.com/articles/paying-more-to-save-more-companies-boosting-salaries-for-supply-chain-executives-1526667098
13. Ibid.
14. “Three ways CEOs can improve the supply chain,” McKinsey; https://www.mckinsey.com/business-functions/operations/our-insights/three-ways-ceos-can-improve-the-supply-chain
15. Ibid.
16. “How digitization changed the nature of supply chain management,” Supply Chain Dive; https://www.supplychaindive.com/news/supply-chain-skills-digitization-cost-revenues-profession/437102/
17. Drive your own Disruption: Is your supply chain in sleep mode?, Accenture; https://www.accenture.com/t20180511T020528Z__w__/us-en/_acnmedia/PDF-78/Accenture-Is-Your-Supply-Chain-In-Sleep-Mode.pdf#zoom=50
18. “Digital transformation: Raising supply-chain performance to new levels,” McKinsey; https://www.mckinsey.com/business-functions/operations/our-insights/digital-transformation-raising-supply-chain-performance-to-new-levels

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