It is that joyous and busy time of the year again. It is essential to get the preparation for the holiday season just right. Depending on the industry, companies might be making between 10 to 20% of their annual profit during this period. However, it simply cannot be done without the precision, preparedness and hard work of supply chain (SC) management professionals. For all the great work they have been doing, SC managers deserve to be highly rewarded. Now is a great time to think of the items which could be added to the Christmas wish list, to be sent to Santa Claus (or better to the CEO) in order for the presents to arrive right on time for the holidays. So what could SC managers hope to find under their Christmas trees? What could be an appropriate reward for all the hard work that has been done in 2014?
A batch of fresh SCM talent
Every company, regardless of its size and the industry it operates in, needs talented people to function profitably and secure market share. Unfortunately, as mentioned in my previous blog article, the SCM talent demand exceeds the supply by a ratio of six to one. One of the greatest gifts a supply chain manager could get is the elimination of the talent gap in the SCM job market and a group of experienced SCM professionals waiting at their company’s door on Monday morning. However, it is not so easy and cannot be achieved overnight. In order to get that fresh batch of SCM talent, a collective effort from all the parties involved should be made. And I am not just talking about Santa Claus having a discussion with the CEO of how and when it is best to surprise supply chain managers with the right talent. Academics, industry representatives and even local governments should be involved in closing the talent gap as well.
Big data 101 handbook
Nowadays, the amount of available data is overwhelming. As companies possess advanced capabilities to collect and store an enormous amount of data, it is becoming essential to be able to interpret it and capitalize on the results. The supply chain director of P&G, Huw Waters said: “My challenge is to sculpt that data into something beautiful, that we can meaningfully use to speed up the supply chain.” It is clear that the ability to make sense of all the available data would increase efficiency and effectiveness of global supply chain processes. However, the way to achieve that has not been fully established yet. According to a recent Accenture study, big data analytics in the supply chain are not widely spread or globally coordinated. Nonetheless, more than 1/3 of executives stated that they are involved in serious conversations to implement big data analytics in the supply chain, and 3 out of 10 already have an organizational initiative to implement analytics in the next 6 to 12 months. So it seems as if the ‘Big data 101 handbook’ is already being put together by Santa’s elves and will be ready for printing within the next couple of years.
A weather proof jacket
According to the World Bank, an increase of 1.5°C above pre-industrial times is already locked into Earth’s atmospheric system due to the past and predicted greenhouse gas emissions. Despite the decision reached by the UN Framework Convention on Climate Change to limit the average global temperature rise to 2ºC, carbon emissions have been rising and reached a record high in 2011. Extreme weather conditions, such as floods, hurricanes and droughts are becoming more common, and have a ripple-effect across global supply chains. Therefore, supply chain managers should be prepared to mitigate the potential disruptions within their supply chain. Finding a magical weather proof jacket for the supply chain under the Christmas tree of every SC manager would be the ideal solution. Just in case Santa is out of stock of these jackets and his supply chain has already been affected by climate change, adopting three principles could help improve readiness for extreme weather:
- Identify the interaction between new risks caused by climate change and existing threats.
- Increase collaboration and pay greater attention to international resource security.
- Start scenario planning and develop risk management plans which could be implemented in case of an emergency.
Better visibility goggles
Transparency has been one of the most popular supply chain topics over the past couple of years. Nowadays, consumers (especially millennials), governments and companies are requiring details about the production processes and systems which deliver products. It is becoming highly important to know if the purchased products come from supply chains which are sustainable, slave and child labor free and comply with safety regulations, as well as ethical standards. There have been a number of scandals which caused enormous losses and damage to brand images of companies whose suppliers were exposed after breaking the safety rules, harming the environment or using child and slave labor. Tragic stories, such as suicides at Foxconn and the Rana Plaza factory collapse in Bangladesh in 2013, made consumers and governments question what rules should apply to suppliers in developing countries.
In order to make the supply chain processes more transparent, giving magical visibility goggles to SC professionals would be the perfect solution. If the elves were to lose the magical goggles on the way to SC managers’ houses (the lack of supply chain transparency can be blamed here), a number of initiatives could be implemented, for example, product traceability. Dole, the largest fruits and vegetables producer in the world, introduced a project called ‘Visit my farm’, which opens the doors to the Dole banana and pineapple farms. Introducing other similar campaigns (i.e. spray-on DNA barcodes) would help companies be accountable to consumers and make sure the supply chain is sustainable, ethical and complies with safety regulations.
And finally… World peace
Probably the most cliché answer to the question: ‘what is our society missing the most?’ during beauty contests is world peace. However, it is a reasonable wish of supply chain managers. Geopolitical disruptions pose a great threat to global supply chains. It is especially relevant now, as several crises have played out across the globe. According to Andrew Williamson, global leader of economic analysis for Dun & Bradstreet, “The unbalanced nature of the global recuperation reinforces the need to proactively monitor events at the country level to ensure that appropriate response planning for potential supply interruption is considered in detail.” He continues by identifying the conflict in the Middle East and the instability in Ukraine as the two key areas of risk for supply chains.
As a result, supply chain managers should be ready to mitigate any threats that may arise due to geo-political instability in order to avoid major disruptions and losses. Detailed instructions of how to do that, sent to SC managers from Santa Claus, would be the ideal gift.
That pretty much sums up the potential SC managers’ Christmas wish list based on my observations of the main supply chain management issues this year. SC management professionals are now just left to hope that the Santa Claus supply chain was not disrupted by the threats mentioned earlier, and that the elves are already stocking up their warehouses and planning the delivery times for supply chain managers around the world….but more on that whole process next week! Stay tuned!