What Really Worries Supply Chain Managers?
1. Capacity/Resource Availability
Managing capacity issues was a priority for firms expecting market growth. Initial approaches to this challenge usually involve a broad range of activities seeking to maximize the firm’s facility capacity, such as replacing old equipment with state-of-the-art higher-capacity equipment. Often the intent is to avoid outsourcing, if possible. Even industries that have experienced declining sales are trying to plan for potential growth. Another critically important capacity aspect for the participant was data system capacity and necessary employee skills sets.
2. Talent
Talent issues, even beyond the information systems arena, were a primary concern for many of the interviewed firms. Talent competition is intense for supply chain jobs. The competition for talent is much higher. Even if firms have successful hiring cycles, they are still concerned about retaining new hires and properly developing and utilizing their talent. Retention also is a concern because of millennial’s job-hopping habits. Concerns regarding succession planning were also expressed by a number of the interviewees
3. Complexity
Many firms are trying to deal with complexity by managing it. They have realized it often is not possible to reduce complexity, so they are focusing on ways to manage it more effectively. Common approaches included greater standardization and simplifying processes. One firm was looking at the potential rewards associated with having different plants "do their own thing." Manufacturing can be standardized by focusing on fewer individual products and SKUs at individual locations or by simplifying component combinations. Citing problems in acting with enough speed, another executive talked about "the need to re-invent ourselves by radically simplifying our processes." He further noted that, by making his company’s supply chain leaner and simplifying processes, it also could mitigate risks. The company now is quicker and more nimble in its operations.
Firms involved in omnichannel business (multiple-channel distribution) face complexity at every turn, and yet systems complexity seemed to be one of their primary concerns. One executive talked about staying awake at night worrying about trying to be best-in-class in the direct-to-consumer arena while still maintaining status as a top wholesaler operating in international supply chains. He pointed to system complexity because "to support both of these businesses, we’ve had to invest in systems for direct to consumer, which are different from what you invest in for wholesale."
4. Threats/Challenges
Many of the executives expressed broad concerns regarding supply chain risks, with a variety of issues with the whole supply chain risk. Continuity planning was a theme commonly mentioned by study participants. Discussions centered on the need to build business continuity considerations into new product development, how to decide when to invest in resiliency, and the additional challenges involved with continuity planning when lean operations are involved. One of the interviewees talked about supply chain being in the middle when a difficult situation or crisis arises. "It can be an issue with a supplier, an issue with the production process, or customers," the participant said. "The supply chain network, in terms of responsibility and risk, is in the middle. So we could have many reasons to stay awake at night. If there is a recall of batches, crisis in the country, or war, we are the ones called upon to make it right."
Many of the challenges discussed by executives involved managing personnel. One executive summarized his firm’s perspective: "The one thing that worries all of us is people in the organization making poor choices and having that come back and kick us. It doesn’t matter where you look in the world, there is enough stuff going on that ends up having repercussions in the supply chain." These issues can also cause reputational damage, the participant noted. "Today, 5 seconds after it happens, someone will upload a video [of a company-related disaster] from their phone onto YouTube," the participant noted. "You’ll have 10 million views by the end of the week. So there are risks to our reputation and our business and ethical behaviors. All are subject to a different standard today."
5. Compliance
Although the executives mentioned a range of compliance components during the interviews, primary compliance issues included product regulation, trade controls, and continually changing regulations. Keeping up with the evolving regulations -a moving target- seemed to be a major issue. According to study participants, the sheer number of regulatory actions and compliance requirements they are required to deal with has become staggering, presenting ever more complex resolutions.
6. Cost/Pricing Issues
Price pressures hit virtually all types of industries. One executibe operating in a commodity business talked about the "need to be ruthlessly efficient if you’re going to survive." To achieve what he termed "cutting edge efficiency," his company is looking at reconfiguring its supplier network to improve the cost structure. However, one executive offered a much different point about cost/pricing issues. He advocated that supply chain performance should not be purely cost driven, and that other factors, such as service and quality, should be considered as well. At the time, his firm was working to change its "mindset from unit-cost accounting to incremental margin costing" to get a broader perspective.