The supply chain learning engine

By Kevin O'Marah | March 13, 2015 | 0 Comments

Supply ChainBeyond Supply Chain

This week I took part in a fantastic event run by Coca-Cola to share learning among its worldwide network of bottling operations – aka, the global supply chain. Everything discussed at the London event was of course confidential, but for any supply chain leader hoping to accelerate learning in his or her organisation, the core concepts are definitely transferrable. Most important is the idea that knowledge already resident in the practitioner community is plenty deep, but that cross-discipline sharing multiplies collective learning to the benefit of all.

Mastering a moving target

The world’s top supply chain academic is Dr Hau Lee of Stanford Graduate School of Business. I’ve worked with him for many years, both as our Chairman here at SCM World and in my past lives at Gartner/AMR Research and Oracle. Last week in a seminar at Harvard Business School, Dr Lee shared his latest research on responsible sourcing with a group of professors and PhD students.

 Hau Lee HBS seminar  Explanation of the buyer model. 

The bottom line of this work is that risks associated with supplier misbehaviour can only be mitigated with direct audits rather than contractual terms. His proof was academically robust and intuitively satisfying, reflecting practical lessons learned in the field by the likes of Disney and Hewlett-Packard. Far from resting on his abundant laurels, Dr Lee continues to shape supply chain by studying it.

The takeaway for a practitioner audience is that supply chain is a discipline crystallising before our very eyes and, unlike pure science or the classical arts, cannot really ever be “mastered”. We should instead approach supply chain learning as a game the rules of which change because we make them change.

Continuous learning isn’t just a good idea; it’s the only way to survive.

Putting your money where your mouth is

Supply chain talent is the fastest-growing topic of research and discussion within the SCM World community. It is the most heavily used of all eleven content modules on our system, with over 10,000 hits in 2014. It is also the topic of our best-selling event ever, the Fast Forward Capability conference in Chicago this coming summer.

Data from last year’s CSCO survey shows that the acquisition and development of talent is a growing problem, with 42% of you saying it has become harder in the past three years – compared to only 22% who said the same in 2011. We most certainly feel a need to accelerate learning in the profession.

And yet, we seem to be investing less now than when we started researching this topic a few years back. Across all industries surveyed in 2011, the average share of fully loaded personnel cost spent on talent development was just under 3%. In 2014 that number had fallen to 2.6%.

 Talent development spend by industry

Cutting this data by sector shows a wide range in willingness to spend on talent, but less linkage to fundamental profitability than one might expect. Industrial tops the list, while high-margin healthcare & pharmaceuticals lags. Tellingly also, it is the apex customers in retail and automotive who invest the least, suggesting that proximity to end consumers does little to elevate organisational appetite for supply chain talent development.

Learning by doing

Which brings me back to Coca-Cola and this week’s event in London; the principles that I saw underpinning the design of the sessions included:

  • Insistence on practicality and applicability
  • Willingness to think big, broad and well into the future
  • Emphasis on customer demand as the ultimate driver
  • Respect for engineering fact as the ultimate constraint
  • Recognition that those doing the work are the real experts

Far too often people in supply chain come looking for “best practices”, only to find that what Apple or Wal-Mart do is not only impossible for them, but a bad match strategically. Best practice is what works best for your business situation, not something absolute that can be benchmarked and mastered.

Great supply chain leaders enable their people to learn faster by thinking laterally about innovation and problem solving, but never at the expense of commitments to customers or colleagues. Events like the one I saw this week are built to do exactly this.

Supply chain excellence cannot be bought, but with this kind of learning engine it can be earned.

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