Supply Chain Digital Disruption – What Does It Mean For “Talent”?

Executive search and leadership experts Korn Ferry published a new piece of research recently. It was written by our old friend Bernhard Raschke - procurement and supply chain guru and cool biker - along with colleagues Tessa Waterman and Paul Lambert. Raschke had a very successful career in consulting before moving into recruitment and he has a deep interest in procurement and supply chain direction and strategy rather than purely focusing on the "recruitment" angle.

That is reflected in this paper - “The Supply Chain Digital Disruption - Its impact on executive talent” looks at some important general strategic issues as well as the emerging requirement for greater human capability in all things “digital” in the supply chain world.

It is focused on the types of business for whom supply chain is critical – so that includes all manufacturing and retail businesses, but perhaps less so “pure” services firms, for instance, although even in those cases some of the key elements of “digitisation” discussed in the report will be relevant.

So it’s useful reading for most procurement people, particularly anyone in those sectors where supply chain is key, and it paints a picture of unmet need really in terms of the skills and talent available in this field.  Three quarters of the 100 supply chain executives who participated in the study (through a survey and interviews) acknowledged that digitisation is highly relevant to their situation. As the report says, “The function is expected to develop greater flexibility, lower cost and risk, and even develop new ways of analysing its potential revenue impact.”

But about four in 10 of those surveyed (41 percent) said a key barrier to digitising the supply chain was the availability of digital talent.  Despite this, the “financial commitment to developing the required skills is low”, with two thirds of executives saying that less than 10% of training budgets is relevant to digital, and that this amount is clearly not enough.

We’ve seen a similar picture in terms of wider procurement skills in other research too – senior executives complaining about a lack of procurement skills, yet organisations simply not investing to improve that situation.

Three-quarters of the sample positioned themselves in the middle of the pack, saying that a start has been made on digitisation, but there was still some way to go, with the “lack of a clear strategy” the biggest barrier to digital transformation.  Lack of digital talent was a close second - that fits with our own thinking on general procurement transformation, where clarity of purpose (strategy) has to come first, and then the “people aspects” really are the most critical success factor.

The report also identifies a lack of understanding at Board level, and there are interesting comments from Professor Janet Godsell of the University of Warwick.  “The missing capability is understanding of supply chain at board level. Supply chain is seen as cost-down, whereas we should see it as a new revenue model generator. Everything comes back to the leadership challenge; why are we failing to get the right leadership at the top?”

In terms of that leadership question, we do wonder how “procurement” is likely to fit organisationally  into the emerging world of digital supply chains. The report talks about the increasing emergence of a board-level “Chief Supply Chain Officer” (CSCO). So where does that leave the Chief Procurement Officer” (CPO), we wondered? We put that question to Bernhard Raschke.

“It really varies by industry, but in many cases procurement should really be seen as part of the end-to-end supply chain. But in some industries the CPO reports to the CFO, in automotive it may sit at Board level alongside manufacturing, while in consumer product firms the CPO may well report to a CSCO”.

Anyway, you can download the report here; well worth a look, and we will be speaking to Raschke shortly at greater length about the findings and what they mean for professionals in procurement and supply chain roles.

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