The Great Supply Chain Inquisition
It’s well established for supply chain professionals that these are unprecedented times. To begin with, there’s never a dull moment in the world of supply chain management (SCM) but recent challenges facing global manufacturing and trade have made plain the shortcomings of SCM as we know and practice it today.
For supply chain professional Chris Koehler, these shortcomings are rooted in the long-held tradition of siloed, lean business practices.
But as the world faces a shortage of parts and labour, and road maps out of this turbulent period, it seems the right time for SCM to get an overhaul.
No More Departmental Silos
As industries and professions, supply chain and manufacturing are incredibly complex. In many ways, it made sense to carefully divide labour along the most efficient lines. This allowed people with expertise to do what they do best: execute.
Today, those dividing lines aren’t so clear and departmental silos are finally coming down.
“More than ever, cross-functional collaboration is incredibly important,” says Koehler. “Creating a dynamic hub between, for example, sales, manufacturing, procurement, finance, and HR, allows for a better flow of communication and increased visibility for all departments.”1
Not all SCM veterans—nor all new SCM grads—are equipped with the skills required to work cross-functionally.
“I do believe you need that skill set to be truly successful,” says Koehler. “But so much of that skill can be acquired on the job. If you’re a buyer, for example, you can build out your skill set by working more with sales—even on a project by project basis—or by collaborating directly with engineering and manufacturing teams to better understand their needs.”1
“People that are able to speak the language of other business functions and be a productive force in cross-functional projects will thrive in the coming years,” says Koehler.1
The Critical Importance of Workforce Planning
Workforce planning is a challenging undertaking even for those organizations with dedicated human resources teams. But workforce planning is critical to business success, just like production or capital strategy.
While the landscape is changing very quickly today and it may be hard to identify the specifics of what a given organization may need seven years down the road, such planning still mustn’t be neglected.
“A lot of companies I’ve worked with have had that gap in mid-term planning,” says Chris Koehler, supply chain and operations professional. “They may be great at short-term planning; being rarely reactive and, instead, tactical. Or they may be great at planning for the long-term, five-to-ten-year goals. But many companies struggle with the one-to-three-year range.”1
The one-to-three-year range is a critical slice of time for building out a robust workforce, especially when demand for new skills is so high. Carrying out a thorough audit to identify pain points, team shortcomings, and company goals (perhaps with the assistance of a consultant) will identify personnel needs for the next several years.
“There’s a perception that hiring is still a rather expedient process and across the board that seems to be untrue,” says Koehler. “This is an employees’ market. It takes much longer to identify workforce gaps, interview candidates, and finally make an offer. Working with an HR consultant or recruiter in these cases can make all the difference.”1
One secret to making workforce planning more bearable? Don’t put it off.
“There are so many items you need to be discussing regularly,” says Koehler. “From hiring to capital expenditures—it’s very important to ensure you don’t have that big gap in your mid-term planning.”1
Demand Driven Material Resources Planning
For new professionals moving into SCM or strategic manufacturing positions, a thorough understanding of SCM methodologies are critical. And in the last few years, we’ve seen many of these methodologies in action.
From just-in-time to just-in-case to Demand Driven Material Requirements Planning (DDMRP), no one methodology has yet solved the problems facing the supply chain altogether.2
As supply chains became increasingly lean throughout the early aughts and especially in the last ten years, manufacturers mostly moved toward the just-in-time model. The idea is to have just enough inventory on hand to meet demand; this is meant to eliminate costs associated with overproduction, warehousing unsold goods, and disposal of unsold goods.
In response, companies began building up inventory in a just-in-case approach. Rather than a lean approach, this methodology ensures goods will always be on hand to address sudden surges in demand as we saw in 2020. But this means lots of goods will require warehousing—a costly endeavour in areas like Vancouver, where warehouse space is at an absolute premium.
“Smaller manufacturers are at a disadvantage in many ways,” says Koehler. “If you consider a manufacturer like Toyota, for example—they have enough leverage that they can lean on suppliers to ensure they get what they need. The scale of their business is too large for suppliers to risk losing. Little guys don’t have that leverage.”1
To respond, some SCM professionals have turned toward DDMRP, which bases manufacturing on current demand levels. Unlike just-in-time and just-in-case, DDMRP attempts to adapt and absorb slack (or tension) in the supply chain at multiple points.
“It’s important for supply chain professionals to be acquainted with these different planning methodologies to ensure they’re never caught out,” says Koehler. “While one methodology might intuitively seem like it ticks every box, the reality is that unpredictability still reigns. On a personnel level, being able to work cross-functionally with a robust team to strategize on the fly will be critical.”1