This summer, I had the chance to attend SAP Ariba Live, which was a conference on e-procurement. You might now be asking yourself, “What does HR have with the supply chain?”.
As human resources professionals, our primary responsibility is to help the organization find talented people. This includes supply chain managers. When finding talent, many companies are increasing the use of outside workers (i.e., Freelancers, contractors, and consultants). These are all being used more often when it comes to finding talent. HR plays a key role in this process. It is not about “hiring the most expensive” person. Just like finding the right employees, companies must find the right contractor.
Finally, as I have said before, organizations should be focused on performance. This conversation includes how products and services are brought to market. This is the supply chain. Human resources professionals looking to understand the relationship between talent management, business results, and supply chain management might find it useful to learn more about this topic. Leah Knight is the senior director of supply chain marketing for SAP Ariba. I was able to learn more from her.
Apply chain is an evolving and growing field. Gartner researched the future supply chain and predicts there will be a shortage in supply chain personnel due to this evolution of skill set. This field is becoming more dependent on technology skills, so human resources might be required to locate professionals in areas where they are not easily found.
Over the past five to ten years, consider how supply chain technology, particularly integrated business planning, has changed the role supply chain planner. Instead of doing number crunching in Microsoft Excel, the planner uses sophisticated mathematical algorithms to help build their production plans across regions, factories and product lines.
It would help if you also considered how supplier collaboration technologies have led to a similar shift in skill set. From manual collaboration (e.g., asking a supplier by phone or email if they can commit to a forecast) to automated collaboration tools that leverage Web, XML and Cloud technologies, AI, machine learning, mobile, and mobile.
As the demand for tech-savvy professionals grows, I believe HR will be more essential to the supply chain.
Please tell us to make sure everyone is on the same page about supply chain management. What does supply chain management have to do with purchasing or procurement?
Supply chain management typically consists of two parts:
The supply chain function is responsible for managing goods and related services to support production and the flow of the goods. This includes managing raw materials, work in process, and finished goods, as they move from supplier or distribution center to different manufacturing locations worldwide. This includes contract manufacturing, tolling, co-packing, logistical service, and returns.
Supply chain professionals usually focus on long-term planning (e.g., forecasts for a 6-month time horizon for these products); mid-range execution and near-term execution inventory programs (e.g., consigned inventory, supplier managed inventory); quality supply, work-in-progress (WIP), and finished goods; delivery; replenishment at customer warehouses; and so forth. These are the most common key performance indicators (KPIs).
- Customer service is measured in terms of stockouts, on-time/full deliveries, revenue upside, and stockouts.
- Inventory efficiency/working capital (measured inventory turnovers, inventory days, inventory aging etc. ),
- Quality of finished goods and inventory
- Productivity.
The next is the supply chain/direct sourcing area. This area is also called ‘commodity management’ or ‘buyers’. In some industries, it’s also known as ‘direct procurement’. This is the area responsible for sourcing and contracting raw materials, components and assemblies, and related services (such as contract manufacturing, tolling and co-packing and logistics services). These services and suppliers are necessary to design, produce and deliver final products.
Supply chain professionals make a build or buy decision, deciding if it is more cost-effective to hire a contract manufacturer/supplier for components rather than making the components. These are the most common KPIs:
- Material costs (includes whether they meet quarterly or annual cost reduction targets).
- Cycle time is the amount of time it takes to finish a source-to-contract process.
- Productivity in the team
- Quality of suppliers
- Supplier risk.
I learned how Cirque du Soleil uses an integrated dashboard to manage its supply chain, including talent, during SAP Ariba Life. Please share your thoughts on how supply chain technology affects HR today.
[Knight] Supply Chain technology requires a shift in skills for supply chain professionals. Cloud technologies require a fascinating shift because many supply chain professionals embrace Them to avoid long lead times, queues and competing projects in their IT departments. Although cloud technologies can be chosen directly by the supply-chain department, this requires additional technology evaluation, selection, and ongoing collaboration with vendors. This is not possible if IT was the only area that used to have power over the supply chain.