March 2009 | Commentary | Viewpoint

The Evolving Supply Chain Manager

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Managing today's complex supply chain requires the skills of a C-level executive, plus the special knowledge of supply chain disciplines including forecasting, purchasing, transportation, inventory management, quality, warehousing, channel costing, and technology.

Fifty years ago, nobody managed a supply chain. Departments and individuals teamed up to obtain supply certainty and efficiency. But conflicting departmental and individual goals, poor communication, obsolete accounting practices, and other issues frequently impeded success.

Companies began to recognize these problems and gravitate toward organization realignment, forming materials management departments in which purchasing and marketing often played a peripheral role. The principal stakeholders often dictated the specific capabilities, services, and performance standards that suppliers must meet. The purchasing representative then assumed responsibility for finding suitable sources.

In the 1980s, a range of factors virtually eliminated strong internal supply management capabilities. Cost pressures, new technologies, a focus on core competencies, the trend toward downsizing and outsourcing, the desire to consolidate sources, and the marginalization of supply disciplines were among the elements that gave rise to a whole new segment: the third-party logistics provider. The purchasing officer often contracted these services, while a logistics coordinator oversaw them, relying heavily on the IT and finance managers who drove the new systems.

COMPLICATIONS ARISE

Concurrently, many savvy supply chain practitioners recognized that the impact of newly adopted practices such as just-in-time, lean manufacturing, Six Sigma expectations, and ISO standards, as well as the availability of new technologies, required that enhanced supply chain management skills and practices be developed and retained in-house.

As organizations were pursuing these diverse approaches, two new demands on supplier sourcing were converging: the need to identify and relate to possible global suppliers, and the need to ensure that identified suppliers could adapt to new technologies and to doing business in global markets.

Some organizations that had been stripped of the core skills necessary to manage a supply chain turned to their purchasing officers, or to their IT or finance managers—the only remaining institutional bases of operating knowledge—to supervise the supply chain.

THE NEW RULING CLASS

Organizations that recognized these evolving, subtle changes began rebuilding the expertise necessary to truly manage the increasingly diverse and remote base of suppliers and partners. They shored up the hard skills such as inventory and transportation management, quality control, and warehousing, and taught the soft management skills of team building, cultural understanding, and currency economics.

Today, new CEO/COO-qualified supply management executives, charged with entrepreneurial responsibilities and energized with a cadre of imaginative and creative functional managers and specialists, lead organizations poised to harness a continuous stream of opportunities. These are the men and women who will usher supply chain management into its next renaissance.

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