Insights on the Evolving Role of Supply Management

Posted: 10/05/2021 - 00:00

Insights on the Evolving Role of Supply Management

The global COVID-19 pandemic put supply chain management and procurement in a very bright and positive spotlight for keeping life moving as normal as possible during all the shutdowns, disruption and general uncertainty.

It also highlighted that business and supply chain disruption are ongoing facts of life – such as ongoing extreme weather events globally and a megaship blocking the Suez Canal for weeks, to name just two. And the impacts created a snowball effect on other industries:

  • Automakers don’t have enough chips to build cars, leading to shutdowns
  • Construction companies don’t have enough wood to build homes, and the prices are skyrocketing
  • Cargo is sitting waiting to be unloaded at ports around the world, creating shortages

There are many factors at work behind these and other situations the world finds itself in right now, and will continue to find itself in the years ahead. But one thing is for sure, the role that supply management plays will have to adapt to meet a fast-changing future.

A recent article on the Institute for Supply Management explored the shifting and evolving discipline of supply management and the professionals in it, and what the future may/can/will/should hold for the function and job roles. Here we take a look at some of those roles more closely.

The Role of Technology

The Gartner Predicts 2021: Supply Chain Technology report highlights a very revealing key finding: “While the pace of change in supply chain accelerates, only 42% of supply chain organizations have adopted agile methodologies, breaking projects into smaller increments and allowing quicker realization of failures and reallocation of efforts.”

That shows a real lag in SCM digital transformation efforts, in everything from visibility to data analysis and predictive forecasting. Those aspects are mutually critical, because as supply management professionals and Procurement get better at leveraging tech and data, there will be increased demands on suppliers for transparency. This will impact relationships and collaboration – see more on that below.

Technology adoption is mandatory to effectively leverage all the massive data that is increasingly inundating companies from multiple sources, and to better inform strategy and decision-making. As Procurement gets better access to data and better tools to leverage it, more day-to-day activities will center around the insights it provides that are not possible today.

In the case of supply management, these include outside sources like weather, global news, supplier financial health, etc., to gauge how global changes will influence spend/supplier relationships.

With the continuing advancements in the areas of Artificial Intelligence (AI), Robotic Process Automation (RPA), block chain, IoT, and so forth, the role of technology in supply management will become even more useful for predictive analytics, forecasting, compliance, agility and other areas.

This reliance on technology doesn’t mean that Procurement and SCM practitioners need to become data scientists, but those who are the most familiar and capable with the tools are going to have the most advantages. This is something to bear in mind as supply management recruits new (and probably younger) teams.

The Role of People  

As supply management itself morphs and changes, so too will the role of people within it. In the years ahead it’s easy to see that, in addition to the tech skills mentioned above, that SCM professionals will need an increased focus and broader perspective on disaster recovery and supply chain risk, especially for Tier 2 and 3 direct materials, as well as indirect commodities that have the ability to shut down supply (such as N95 masks and cleaning products). Everyone in the field now has been living this since the start of the COVID-19 pandemic (and probably earlier, if not to the same degree).

The increased need for diverse skillsets goes together with digital transformation if organizations are to achieve the highest levels of agility in staying ahead of natural shifts in demands, as well as during disruption. With that comes the need for improved business cases for technology investment.

There will be a greater institutionalization of knowledge and management of key categories, as well as a renewed emphasis on supplier relationship management, especially multi-supplier cooperation. Whether or not current roles expand to encompass a broader skillset, or new roles need to be created remains to be seen. Most likely, some combination of the two as supply management attains greater importance (and value) within organizations.

The Role of Relationships + Collaboration

As mentioned, one of the key “benefits” for Procurement and supply management teams during the pandemic was the increase in perceived value they bring to an organization (and the public). It became blindingly obvious that without Procurement and the supply chains they manage, businesses, societies and economies come to a standstill.

A lot of the success in keeping things moving has to be attributed to managing relationships with suppliers, and what that process actually entails. These relationships are gaining in importance and are (or should be) becoming much more collaborative. Getting beyond the traditional buyer/supplier dynamic certainly has its challenges, but a shift toward mutual success and reliance (for innovation, time-to-market, agility) is going to provide enormous advantages to both sides.

Procurement and supply management teams will also need to have an increased focus on internal stakeholder education and collaboration. This naturally includes the C-suite, which is critical for not only strategic planning, but for nuts-and-bolts support in terms of digital transformation/IT budgets and human resource needs.

Improving information sharing and collaboration across business silos and systems and working more closely with stakeholders at all levels in the organization puts Procurement in a position to achieve greater agility/flexibility collectively, rather than trying to drive it independently.

It will also facilitate other goals like diversity and sustainable sourcing. This is akin to internal marketing of Procurement, which all Procurement groups need to be good at, but also will need to be a priority for Procurement managers and leaders to increase influence.

The Role of Risk

In the same way that “leadership” means “technology leadership” today, “supply management” means “risk management.” As disruption becomes a way of life, staying ahead of the risk curve will involve a real focus on everything from geopolitical threats and natural disasters to the increasing problem of global cybersecurity. Ironically enough, this is a direct result of the expanding reliance on technology.

Since every industry, business, department and location increasingly leverages technology, this exposes enterprises to more vulnerabilities from more sources. Internally, there is greater opportunity to try and control these cybersecurity risks, but external control is going to take a more concerted and creative effort.

Procurement and supply managers specifically need to be better educated in vetting suppliers (and their suppliers) during the sourcing process, as more and more projects will involve some technology touchpoint with the suppliers if the buy doesn’t include technology itself. This goes back to the role of people in the future, as this will involve training, certifications or increased role specialization.

Where Does Supply Management Go From Here

As ISM concluded in their research, “Mobility, improved data sets and a focus on supply risk for both direct and indirect materials will evolve today’s supply chain professionals into tomorrow’s operational business leaders.”

Procurement and supply chain management are better placed than most other functions within organizations to have visibility of and control over spend, costs, savings and risk. With the adoption of advanced Procure-to-Pay and data/spend analytics solutions that integrate AI and other advantages, teams will be able to achieve greater proactivity, agility, and be more analytical and business focused in order to do their job effectively to bring more value to the enterprise.

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About The Author

Joe Payne's picture

Joe Payne, Senior Vice President of Source-to-Pay for Corcentric, is a sourcing and procurement expert. He has spent his entire career working with many different companies, ranging from mid-sized and large companies to the Fortune 100, to optimize their sourcing and procurement strategies. As a strategic sourcing consultant, he has worked to identify a company’s unique sourcing needs, identify optimal areas for improvement, and ensure a tailored approach that drives performance improvement.