There's a New Supply Chain Sheriff in Town

Today's community-centric supply chain may actually be more effectively managed by executives who were not groomed in the 'traditional' supply chain environment.

When we hear "community," we typically think of a neighborhood, or a blogging group, or even Obama's grassroots organizing, all of which require a community manager to keep the peace, incite action, and influence members. Within the last decade, as the supply chain world has undergone a tectonic shift, the concept of community has made its way into manufacturing circles.

More companies are turning to outsourcing via contract manufacturers -- around the country, near-shore, and overseas -- which means they are faced with globally dispersed supply chains that are now more community-centric than manufacturing-centric. In this model, executives do not have direct control over the supplier and customer community, requiring that they manage "by influence" to address the different risks and rewards of product sourcing.

As a result, today's community-centric supply chain may actually be more effectively managed by executives who were not groomed in the "traditional" supply chain environment.

Surprised?

Don't be. There's a new supply chain sheriff in town, whose responsibilities need to mesh with market-facing corporate expertise -- skills like design, marketing, and distribution.

Job Title: Director, Supply Chain Community

Job Description: Manage customer needs and the community of suppliers in today's outsourced manufacturing environment.

Qualifications: Must have market-facing experience (marketing, account management, etc.), and excellent relationship-building, negotiation, and communication skills.

Responsibilities: Supply chain community leadership, including supplier selection, contract negotiation, evaluation and management; customer service; product design and velocity; problem resolution.

In the past, supply chain executives couldn't land a job without heavy manufacturing experience in or around plants. For them, supply chain management meant juggling planning and delivery of parts and components, and managing labor and equipment to maximize asset utilization to optimize margins.

But now, in a world where partners are providing manufacturing services, rather than simply supplying parts and assemblies, shop-floor expertise is less relevant. In this outsourced model, executives' jobs are merging with brand-centric functions in a way that simply wasn't required before, breaking down the walls between marketing, design, engineering, and manufacturing.

Think of it as serving two masters: your company's market-facing team (understanding the nuances of demand side variables and what that means to production) and suppliers (communicating how demand and its inherent shifts impact the community).

Whether you're an executive expanding your skill set or hiring employees, these five guidelines will help you prepare for the new role of supply chain community director.

  1. Manage by Influence. Hard core manufacturing expertise is no longer the sole requirement for supply chain management. Today's environment requires a new management style: by influence. Because you do not have direct control over a manufacturing organization contained within the traditional "four walls" of a factory, you must be relationship-oriented and understand how to work within -- and with -- the members of the entire community. Without direct control, it is more difficult to manage demand and supply shifts. The ability, therefore, to manage by influence requires you to be proactive and draw on externally-facing expertise from non-manufacturing backgrounds, such as customer account management, brand management, purchasing, and strategic sourcing. Instead of management by dictating, you must be able to build relationships and influence your partners to achieve your common goals.
  2. Understand the Ripple Effect. Inherent in any community model is the need for collaboration, which in today's model, is no longer as simple as a walk downstairs to the shop floor. Today's supply chain community directors must understand the ripple effect: the impact on the entire interconnected community when, for example, demand changes, or a partner cannot meet obligations. Periodic planning must be complemented by event management to deal with the natural fluidity of demand. In this virtual manufacturing environment -- with manufacturing typically in factories thousands of miles away (and often while you're sleeping) -- you must be flexible, work as a diverse team and adapt to dynamic business, social, and cultural changes.
  3. Navigate the Negotiation Balancing Act. Whether dealing with risk or reward, the community trumps the individual in the brand-centric supply model. By outsourcing manufacturing, companies give up direct control of product supply, introducing new risks around quality, lead time, capacity, etc. The ability to negotiate -- quickly and confidently --- and balance the needs of supplier and customer will enable you to establish common goals, measure performance and reward joint success for the sustainability of the community as a whole. Remember: it is no longer about "me" it's about "us."
  4. Ease the Community's Tech Burden. Today, supply chain community directors' tech savvy is heralded over their manufacturing savvy. In our globally dispersed supply chain community, the persistent challenges of lack of visibility, latency, and inaccuracy of information will only worsen. Companies need the support of community supply chain management (C-SCM) technology that improves cross-community visibility, with many-to-many relationships among all stakeholders, as well as across business processes (e.g. forecasting, purchasing, and fulfillment).

    As the supply chain community director, you need to know information before, or as soon as, it happens. If a truck or container didn't make a transport ship or if there's a strike in Asia, you cannot be caught off guard. By being an advocate for automated sense and respond solutions, you'll make your job much easier: fire-fighting issues will be replaced with comprehensive, on-demand visibility into all supply chain operations for proactive rather than reactive management.
  5. Trust and Be Trustworthy. Trusting both your data and your community of partners is paramount. In the old supply chain world, you could do inventory assessment by walking into the warehouse and counting boxes. Today, you may only have a portion of inventory in a small warehouse, with the majority of it on a ship or warehoused in China. So, as Ronald Reagan said: "trust but verify" when working with partners.

To create a high performance community, we must strive to end the days of fiefdoms of spreadsheets on employee laptops. With new technology and collaborative processes, data must be transparent to the appropriate decision makers so that the right people within the community have the ability to share and act on information. This much-needed transparency prevents individuals from manipulating or hiding data, but it also requires a trust model among the people you work with. By cultivating preferred partner relationships and creating incentives, you can prove your mutual worth and further build trust.

Whether you're managing an online community of game enthusiasts, Linux lovers, or now, manufacturing partners, the basic tenets are the same. Don't get left behind. The new supply chain model requires a new approach and by embracing new market-facing skill sets to serve the entire community, you'll be among the most important assets to the business.

Amar Singh is President and CEO of Amitive. He brings more than 17 years of supply chain management (SCM) and enterprise software experience to the company. Previously, Singh was a Senior Vice President at SAP with overall product development responsibility for SAP's entire SCM, Product Lifecycle and Manufacturing solutions. www.Amitive.com

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