Supply manager role takes on strategic nature to meet value-add expectations
The process of requisitioning materials has evolved from a department function 25 years ago, to a sourcing role 10 years ago, to a strategic element of achieving the corporate business strategy today. The forces behind this evolution are competition, globalization, and partnering—and the expectations of CEOs as to what constitutes a “strategic supply manager.
The process of requisitioning materials has evolved from a department function 25 years ago, to a sourcing role 10 years ago, to a strategic element of achieving the corporate business strategy today.
The forces behind this evolution are competition, globalization, and partnering—and the expectations of CEOs as to what constitutes a “strategic supply manager.” Those expectations will continue to heighten, according to a study conducted by Arizona State University (ASU); CAPS Research ; and the Institute of Supply Management (ISM).
The research canvassed senior operation executives and CEOs the U.S., Europe, and South America. “The big surprise was the rate at which the strategic role of supply managers has [advanced],” says Dr. Joseph Carter, professor of supply chain management at ASU. “Talent management in the discipline was another surprise,” says Carter. “Not that executives deemed it important, but how far they need to go to operationalize a value-added talent strategy. It is still very ad hoc. A respondent at a leading mining company put it best, saying her company knows more about the tires on the construction equipment in the mines than the person sitting at the next desk.”
Talent development is paramount as chief executives will be asking supply managers to deliver value in more areas. “Supply managers will have to identify more with their suppliers and partners, [pinpointing] which are key, what their capabilities are, and how to leverage them,” says Carter. “Companies can no longer rely on innovation strictly from internal sources.
“The second metric they'll be evaluated on is how they contribute to revenue generation in the company,” continues Carter. “In the past, the emphasis was on cost reduction, which has been primary for decades.” But sourcing—i.e., ensuring a reliable and effective stream of materials to compete in new markets that can grow the top line—will become more important.
CEOs also will look to supply managers to deliver value via expanded cost management. “Are you keeping a cost profile that is competitive, and benchmarked against the industry?” asks Carter. “With globalization, raw material prices have soared. We'll have to manage our way through that.”
The final factor is supply risk management. “How to ensure a reliable supply chain, and mitigate risks as they arise,” says Carter.
Technology plays a role in all of this, particularly with integrated solutions that permit increased collaboration within the enterprise—and out to its partners.
“Technology needs to become more integrated, more collaborative, and more flexible,” says Carter,” adding that the technology must support companies sourcing for more niche markets, as well as aggregation of sourcing on a global basis for numerous divisions. “You need software that allows each unit to operate independently as well as collaboratively, yet be flexible enough to extend across the enterprise.”