The global COVID-19 pandemic has put Supply Chain Management and Procurement in the very bright and positive spotlight to keep life moving as normally as possible during all the shutdowns, disruption and general uncertainty.
It also highlighted that business and supply chain disruption are constant facts of life – such as ongoing severe weather events globally and the massive move that shut down the Suez Canal for weeks, to name a few. And the influences created a snowball effect on other industries:
- Automakers don’t have enough chips to build cars, leading to shutdowns
- Construction companies do not have enough wood to build houses and prices are skyrocketing
- Goods are waiting to be unloaded at ports around the world, causing shortages
There are many factors behind these and other situations that the world finds itself in now, and will continue to find itself in the years to come. But one thing is certain, the role of supply management must adapt to a rapidly changing future.
A recent article by the Institute of Supply Management explored the transformation and evolution of the field of supply management and its professionals, and what the future may/can/will/must hold for the job and job roles. Here we look at some of these roles more closely.
The role of technology
The Gartner Predicts 2021: Supply Chain Technology The report highlights a very revealing key finding: “While the pace of supply chain change is accelerating, only 42% of supply chain organizations have adopted agile methodologies, breaking projects down into smaller increments and allowing for rapid realization of failure and a reallocation of efforts.”
This shows a real lag in SCM’s digital transformation efforts, in everything from vision to data analysis and forecasting. These aspects are mutually crucial, because as procurement and supply management professionals improve in leveraging technology and data, there will be increased demands on suppliers for transparency. This will affect relationships and collaboration – see more on that below.
Adoption of technology is imperative to effectively utilize all the big data that is increasingly flooding businesses from multiple sources, and to inform strategy and decision-making better. As purchases gain better access to data and better tools to take advantage of it, more daily activities will revolve around the insights you provide that are not possible today.
In the case of supply management, these include external sources such as weather, world news, financial health of suppliers etc., to measure the impact of global changes on spending/suppliers relationships.
With the continuous developments in the areas of Artificial Intelligence (AI), Robotic Process Automation (RPA), Blockchain, Internet of Things, etc., the role of technology in supply management will become more and more useful for predictive analytics, forecasting, compliance, agility and other areas.
This reliance on technology does not mean that Procurement and SCM practitioners need to become data scientists, but that those who are more familiar with and capable of the tools will reap the most benefits. This is something to keep in mind as the supply department is recruiting new (and possibly smaller) teams.
The role of people
As supply management itself shifts and changes, so will the role of the people within it. In the coming years, it is easy to see that in addition to the above technical skills, SCM professionals will need an increased focus and a broader perspective on disaster recovery and supply chain risk, especially for direct materials at level 2 and 3, as well as indirect goods that have the potential to Supply shutdowns (eg N95 masks, cleaning products). Everyone in the field has now been living this since the start of the COVID-19 pandemic (and possibly before, if not to the same extent).
The growing need for diverse skill sets aligns with digital transformation if organizations are to achieve the highest levels of flexibility to stay ahead of natural shifts in demand, as well as during disruption. With that comes the need for improved business studies to invest in technology.
There will be greater institutionalization of knowledge and key category management, as well as a renewed focus on supplier relationship management, especially multi-vendor collaboration. Whether or not existing roles expand to a broader skill set, or new roles should be created, remains to be seen. Most likely, a combination of the two as supply management is gaining more importance (and value) within organizations.
The role of relationships + cooperation
As mentioned, one of the main “benefits” for procurement and supply management teams during the pandemic has been the increase in the perceived value they bring to the organization (and the public). It has become emphatically clear that without procurement and the supply chains that run them, businesses, societies and economies come to a halt.
Much of the success in keeping things running should be attributed to managing supplier relationships, and what that process actually entails. These relationships are gaining importance and they are (or should be) becoming more collaborative. Going beyond the traditional buyer/supplier dynamic certainly has its challenges, but the shift toward success and interdependence (for innovation, time to market, and agility) will provide enormous advantages for both sides.
The procurement and supply management teams will also need to place greater emphasis on educating and collaborating with internal stakeholders. This naturally includes the C-suite, which is critical not only to strategic planning, but to supporting the nuts and bolts of digital transformation/IT budgets and HR needs.
Improving information sharing and collaboration across silo business systems and working closely with stakeholders at all levels of the organization puts procurement in a position to achieve greater flexibility/flexibility collectively, rather than trying to drive it independently.
It will also facilitate the achievement of other goals such as diversity and sustainability in resources. This is similar to internal purchasing marketing, which all purchasing groups must be good at, but it should also be a priority for purchasing managers and leaders to maximize impact.
The role of risk
In the same way that “leadership” means “technological leadership” today, “supply management” means “risk management.” As turbulence becomes a way of life, staying ahead of the risk curve will involve a real focus on everything from geopolitical threats and natural disasters to the growing global cybersecurity problem. Ironically, this is a direct result of the growing reliance on technology.
As every industry, business, department, and location increasingly takes advantage of technology, this exposes companies to more vulnerabilities from more sources. Internally, there is a greater chance of trying to control these cybersecurity risks, but external control will take a more concerted and creative effort.
Purchasing and supply managers specifically need to be better acquainted with supplier vetting (and they suppliers) during the sourcing process, as more and more projects will include some technology contact points with suppliers if the procurement process does not include the technology itself. This goes back to the role of people in the future, as this will include training, certification or further specialization of roles.
Where does supply management go from here
As the ISM concluded in their research, “Mobility, optimizing data sets and focusing on supply risk for both direct and indirect materials will transform today’s supply chain professionals into tomorrow’s operational business leaders.”
Supply Chain Management and Purchasing is better positioned than most other functions within organizations for visibility and control of spending, costs, savings, and risks. By adopting advanced buy-to-pay solutions and data/spend analytics that integrate AI and other benefits, teams will be able to achieve greater proactivity, agility, and be more analytical and business-focused in order to effectively do their work to bring more value to the organization.