According to one survey, only 27% of leaders believe that they have the talent needed to meet current supply chain performance requirements. What should supply chain leaders be looking for to close the talent gap?
AGCO has received well deserved acclaim for the agility with which they navigated the pandemic (How They Did it: AGCO and COVID-19). AGCO is an agricultural equipment manufacturer. They are a public company with over $9 billion in revenues. Greg Toornman – vice president global materials, logistics and demand planning at AGCO – told more of this story in a panel at ARC’s Supply Chain Forum. But when I listened to his remarks, what I found more interesting were his comments on supply chain talent.
Here is what Mr. Toornman said at the conference. “We need people that are adaptable. We need problem solvers, people that can work with data from a data analytics perspective. People that understand things happen, and that if things don’t happen exactly the way the process is laid out, they don’t just stop. They are entrepreneurs. They figure it out! They fix it!”
As Mr. Toornman points out, if you have the right talent, you can have a process that is not quite locked down, and your people can still figure it out and make things work.
When Mr. Toornman was asked if they had a pandemic playbook, Mr. Toornman responded that they did not have a playbook to cover all potential headwinds. They did have robust processes and technologies around supplier risk management. Further, in their global supply chain, with plants and suppliers all over the world, their global team did have visibility to the issues. Their global team is talking a minimum of once a week in terms of the global supply and demand situation. “That forum allows us to understand the risks that are coming up. The actions that we need to be taking.”
When a supply chain disruption occurs, it is not uncommon for complex equipment and automotive manufacturers to have different plants in their company fight each other for the same components. When key components are in short supply, it is key that the prioritization of which plants get which components is predetermined. At AGCO when there is an allocation of supply decision to be taken, there is just one person communicating with a particular supplier and telling them how the tight supply will be allocated among the AGCO factories. Because of that, even though AGCO’s supplier risk playbook did not have a 75-point program spelling out exactly what needed to be done, they were not paralyzed. From Mr. Toornman’s perspective, you can’t have a playbook for every possible risk contingency. “So, then you’re down to your people to take the appropriate steps. And how effective are your people at effectively working together to efficiently develop and execute a recovery plan?” In AGCO’s case, they were very effective.
Another speaker at the ARC forum was Ronan Stevens. Ronan Stephens is the senior vice president of supply chain management and external manufacturing at Ipsen. Ipsen is a global bio-pharmaceutical company with almost $3 billion in annual revenues. Mr. Stevens talked about their supply chain initiative. The life sciences industry has some complex requirements that make transformations in that industry particularly difficult.
Prior to the panel, I talked about Mr. Stephens about Ipsen’s approach to supply chain talent. What Mr. Stephens told me was that Ipsen was running several programs to get their people to where they need to be. IPSEN considers its people to be the key to their success. It is not just about training people in their current role, but it’s also about developing people to the maximum of their potential. A skills assessment survey was done to measure potential gaps against a pre-determined skills matrix. Based on the findings, a skills enhancement program was created.
Different skills were needed for different roles. At the country level, last mile deliveries are executed by people who may only be doing supply chain tasks as part of their larger overall job. Therefore, not surprisingly, the skills assessment showed many opportunities to upgrade skills at the later stage of the supply chain. The skills enhancement program, dubbed Strategic Capabilities Planning, will include a mix of internally supply chain programs, systems education and external APICS courses – APICS is now part of the Association for Supply Chain Management.
When developing Strategic Capability Planning, Ipsen brought in the consulting firm McKinsey as part of the skills transformation. The premise of the study was interesting. The goal should not just be to close the existing gaps. Rather, they projected what the necessary skills would be five years into a more digital future. In short, analytic skills – the ability to run what-if scenario planning will become increasingly important.
As forecasting and order fulfillment becomes more automated, the skills needed by supply chain planners become more analytical. Job titles are changing from supply planner or demand planner to network planner. The network planner does the demand/supply balancing, and the consolidated role makes a lot of senses as it eliminates silos. Increasingly, the role of the network planner is running scenarios to see how to deal with exceptions and disruptions.
Bob Herzog, the global planning digitization leader for supply chain, and Pedro Noriega, planning director, North American product supply, both of Procter & Gamble (P&G), spoke on this at Kinaxis’ Kinexions 2019 user conference. “The 2017 hurricane season,” Mr. Herzog said, “was a big event on our journey. We saw Irma coming, a Category 5 hurricane, and its path.” P&G was able to leverage their digital tools to see what plants, supplier plants, and customer distribution centers were in the path of the storm. P&G activated its business continuity plans and repositioned inventory so that when the hurricane passed, they could supply consumers with what they needed most.
Mr. Noriega singled out a Kinaxis RapidResponse planner as critical to their response to the hurricane. “That kid really saved the day during hurricane.” Their planner was able to tell them by brand and by stock keeping unit where they would run out of product and on which day that would happen. “We never had that before.” They soon saw that by repositioning inventory they could solve all their problems except for one. P&G saw that they could not supply bottles to one of their partners. Then someone said, “why don’t we use the old bottles.” That solved the last problem. Mr. Herzog added that P&G’s competitors told Wall Street their revenue would take a hit based on the hurricane. “We did not have to do that.”
Today’s digital planner also needs good communication skills as the answer to a fulfillment exception often cannot be fully determined by a planning engine. As the P&G example shows, effective collaboration within the broader organization and across partners and customers becomes a key success factor.
Supply chain design software requires scenario development and analysis to an even greater degree than other supply chain planning solutions. Belcorp has saved millions of dollars, while improving service, by using supply chain design software from Coupa. Belcorp Corporation manufactures cosmetics and personal care products for women in 14 nations across Latin America. But Nicolas Frasquet, the executive director of corporate procurement, asserts the savings are not just based on optimization technology. Mr. Frasquet views the years 2018 and 2019 as years when the maturity with which they were able to use these solutions greatly increased. Coupa has developed a supply chain design maturity model. The model requires the right people skills, but also the right processes, technology, and strategy. Belcorp has worked diligently to improve their capabilities using this model. The company is now benchmarked as having the top performing supply chain design team in Latin America.
The pace of change continues to accelerate. Talent matters more than ever.