There is no denying that the Supply Chain Management is critical to the overall of an organisation, yet how integrated it has become in many organisations’ overall strategies, is a matter of debate.
What we can agree on, is that the way we interact with our customers and suppliers has changed dramatically for most companies, in the last five years.
Yet, no matter what changes are brought about on the economic landscape, one thing remains certain – the basic theory of supply and demand is still and always will be, what drive business.
And in the world of Human Resource acquisition, it is no different.
This article will highlight the current and future trends in the supply chain management skills set within South Africa, while analysing where demand will outweigh supply in the future.
The use of case studies will provide some insight into how some companies are dealing with the current deficiencies in the skill set.
It is hoped that this paper will encourage both individuals and training institutions, to provide the South African market with the skills it will require in the next five years.
Supply Chain Management (SCM) has matured over the last five years. Five years ago, many people referred to SCM as ‘just logistics’ and while there are few who unfortunately still hold this view, they are in the minority.
Most organisations believe that supply chain activities are very important to their organisation’s strategy.
Many organisations, particularly those with international parent companies, have undertaken, or currently are undertaking, a strategic supply chain initiative. These strategies often culminate in some form of job creation. A telling statistic is that during the last five years, one quarter of all SCM vacancies were newly created.
The largest recruitment drive has been on the ‘Buy’ side of the chain. In the beginning of the five year analysis period, most vacancies revolved around eProcurement initiatives.
With the crash of the dot-coms, the focus has been transferred to the procurement transformation initiatives involving strategic sourcing and supplier relationship management.
With the focus on transforming the procurement function, room has now been created for the implementation of eProcurement systems and we will see another increase in the demand for these skills within the next five years.
Currently the demand on the procurement side, is for strategic, analytical thinkers who are able to engage suppliers, to ensure that the procurement function compliments the enterprise’s overall strategy – in other words, having the understanding that Procurement can be a revenue generating function as opposed to acting as a ‘cost containment’ function.
Most of these positions have been at the senior management level and have been filled by individuals who come from a traditional procurement role.
They have typically held a second tertiary qualification, are highly numerate with good business acumen and possess exceptional influencing skills.
They are able to think strategically and long-term and can build relationships cross functionally. A key characteristic is their ability to ‘think out of box’ in order to apply creative solutions to typical problems.
In the last five years therefore, Procurement has developed into a recognised discipline. It is no longer just a ‘job’ or function that is a necessary evil, but rather a critical player in the attainment of a company’s strategic goals.
Successful practitioners require more than a commercial or legal background – they need to possess a holistic understanding of business and be strong change agents.
Negotiation skills; technical understanding necessary in commodity management; knowledge of supply markets and customer needs; Total Cost of Ownership and Product Life-Cycle Management, are skills currently in very short supply.
But they are skills that can be learned. There are few training providers focused on developing these skills within the South African market, but most formal institutions have been slow at developing any relevant courses.
A few initiatives are currently underway to rectify this problem, but for the next three years this lack of qualified procurement individuals will remain. And a number of individuals the country will require in the future.
In order for South Africa to reach its full potential in terms of Black Economic Empowerment and job creation, more needs to be done in this regard.
Demand Planning as an organisational function and having a dedicated resource focusing on this, was very rare five years ago.
The demand plan was often compiled by sales and marketing and then handed to production, who revoked it with the inventory personnel.
There has been a strong drive toward making this process more accurate and in some instances; entire Demand Planning departments have arisen.
What is interesting to note, is that most Managers of these internally appointed (mainly coming from a planning or logistics background). Most of the demand and supply planning functional positions were at the more junior level and were often filled by recent graduates with a strong mathematical focus.
The biggest challenge in recruiting for Demand Planning positions is the fact that this role requires individuals to possess above-average numeracy and data analysis skills, while being strong facilitators and negotiators. These two characteristics are not often found in the same individual.
With the development of the planning function and greater data accuracy resulting from this, the current trend is towards Advance Planning and Scheduling initiatives involving the implementation of technology.
This trend is expected to increase over the next two years, with more and more organisations planning projects in these areas.
Besides demand for skills related to specific technology, demand for technical skills in the areas of production planning and scheduling, transport and distribution planning, will increase.
Individuals in demand will possess an exceptional ability to optimise the traditional function, while those performing a typical ‘administrative’ role, will see diminished career opportunities.
Manufacturing is beginning to take its rightful place in supply chain vernacular. Automation, raw materials and maintenance, are the main areas currently being targeted for improvement.
This will lead to new positions and functions being created and some traditional roles becoming obsolete. Once again, technology is playing a larger role in this sector than ever before.
However, skills in demand are still the traditional engineering roles of production and maintenance, with a strong focus on the individual’s understanding of relevant processes and how to attain optimum productivity.
The renewed importance of Six Sigma, Lean Manufacturing and Theory of Constraints (TOC) capabilities on the fundamental goals of SCM (reducing lead time and uncertainty in the enterprise), is creating additional areas of employment for practitioners with these skills in non-manufacturing related activities.
‘Outbound Logistics’ – namely warehousing, distribution and transport, continues to be the main area being measured against an individual’s ability to reduce costs, which is in line with the current trend of carrying less inventory.
Although there is an ample supply of practitioners involved in these areas, there is a huge demand for individuals who can develop creative solutions to optimise these functions, while understanding the impact their decision s have on the overall supply chain.
Historically, Warehousing and Distribution was not perceived to have a great value add opportunities and as a result, most practitioners in these areas were not encourage to think creativity or strategically.
Most have no formal Supply Chain training and having worked their way up ‘through the ranks’, have limited exposure to other functions of the supply chain outside of logistics.
This coupled to current performance management criteria (related to reduced inventory levels and cost containment), perpetuates this focus on functional silos. The greatest opportunity for developing existing skills lies in these areas of the supply chain.
In fact, a third of all ‘trainee’ programmes fall within this segment, yet very few these programmes expose the incumbent to other aspects of the supply chain and they are thus perpetuating this problem.
A large majority of ongoing improvement projects happen within the Store and Move areas and demand for skills in the Project Management, Freight Optimisation, Route Scheduling, DRF and Warehouse Management systems implantation arenas, will be strong.
Warehouse Design skills are also in short supply. With the development of new technologies such as Mobile and Radio Frequency Identification (RFID), demand for the individuals who understand the processes, constraints and possibilities involved in this sector, will rise.
Most projects in this sector involve some type of technology implementation, so a basic understanding of technology is essential.
What is encouraging is the development of new positions within the ‘Sell’ side of the chain.
Collaborative efforts are beginning to mature and marketing and sales professionals are beginning to be drawn into the SCM realm, with ‘Channel Management’ and ‘Customer Relationship Management’ playing a role.
Although these types of positions account for 5% of all SCM recruitment over the last five years, the majority have been filled during the last 24 months.
We expect to see an increase in the number of non-traditional related supply chain jobs arising in areas such as Finance, IT, Human and Legal Resources.
However there is a distinct lack of resources available in these areas and our tertiary education providers would do well to incorporate introductory SCM courses into these disciplines.
Employment opportunities within Supply Chain Management have predominantly been confided to those industries involving physical goods – manufacturing, mining etc. the Service Industry is slow to embark on supply chain initiatives within South Africa and hence there are limited employment opportunities in these areas.
Although there are have been some initiatives in the financial services and telecoms sector, still rely on the service of consulting firms, to address their skills needs.
With the maturation of Supply Chain Management, it is predicted that more service industries will see value in embarking on supply chain optimisation projects. This in turn, will lead to more employment opportunities.
The Consulting field accounts for 10% of all SCM recruitment – a lower figure than most would expect and due largely to the tumultuous last few years the sector has gone through.
Also, the last few years have seen a number of organisations appoint Supply Chain Analyst who operate in an internal consulting role across the organisation, thus reducing their need for external consultants.
Growth in terms of skills in the consulting sector will however, remain largely in the areas of competency development, to address new trends such as Value Added Logistics, Radio Frequency Identification (RFID) and Product Life Cycle Management
Technology related skills account for 10% of all SCM recruitment. This figure is predicted to rise within next two years, as more and more organisations are renewing or updating their technology.
According to the Dawson Consulting’s Supply Chain Foresight survey (2003), 45% of respondents felt that one of the biggest challenges in respect to the implementation of technology lay in the availability of suitably qualified implementation personal.
The market has traditionally relied heavily upon those candidates returning from international contracts, as well as internal training, to help relieve this dearth of skills.
This is perhaps the area where skills are the most lacking and include areas like ERP, Track and Trace technology, Geographical Information / Positioning Systems (GPS) and other Mobile Technologies and Business Intelligence.
Although a strong focus is being placed on internal training (7% of all SCM positions filled have been ‘trainee’ positions), these programmes do not provide the ‘instant’ relief that is required to meet supply chain targets. Thus, companies are looking externally to fill their skills shortages.
The fashion of relaying on your competitor to train your future staff is over. Competing companies have the same need and are requiring the same skills.
As an economy, we can no longer rely on traditional market forces to provide us with the skills we need – the SCM industry is developing faster than the skills set, which often means that the skills are just not out there.
But, by applying some creative thinking to one’s human supply chain, one can overcome these obstacles.
