Executive Briefings

Global Supply Chain Management: Closing the Talent Gaps

Analyst Insight: While the economic slowdown has adversely impacted the volumes of global sourcing and product distribution, global recovery will continue to fuel expansion of importing and exporting worldwide. For companies that source and distribute internationally - more than 80 percent of all companies that make or sell products - supply chain managers need to continue improving their knowledge and processes for effective global supply chain management.

Global supply chain management is complex, challenging, and continually changing. It involves all mega-supply chain processes - PLAN, BUY, MAKE, MOVE, STORE, AND SELL - while including issues such as trade regulations, customs, security, trade finance, cost accounting, international taxes, technologies, and risk mitigation. These issues, and related competencies, are not prevalent in domestic supply chains and are not found in most educational programs.

Most surveys continue to find serious gaps in knowledge and experience in global supply chain management. Fewer than 20 percent of supply chain managers have enough knowledge to plan globally. Even fewer have the experience to manage global operations effectively. While some will learn global logistics and the physical supply chain, they will fall short in understanding trade finance. And some may learn cargo security regulations and compliance, but fall short in understanding the international tax implications of routing logistics flows.

Often, a lack of knowledge causes global supply chain performance measures to be limited. Definitions of cost, time, and service are far different in global operations than those of domestic. Working capital tied up in inventory, for example, is not so important with four weeks of supply as it is with 12 or more weeks. And, the measurement of Total Delivered Cost is far different when product is sourced in China and sold at retail in the U.S., than when shipped overnight from a domestic plant.

Going forward, global supply chain managers MUST develop enough working knowledge to advise senior executives and plan for global expansions. It will be unacceptable for multiple departments to have to consider individual issues for weeks or months in order to advise C-levels on what, where, who, why, and how to BUY, MAKE, MOVE, and SELL, and what the related implications are.

The Outlook

In 2010, more global supply chain managers will step up to learn more about doing business globally. Their companies will demand more ideas, faster responses, and better identification of complete choices. The critical success factors for competitive advantage will return to new initiatives in cost management, profitable growth, and service differentiations - all of which have global implications. Supply chain managers need to be in the forefront of the recovery, as well as become competent business advisors.

Global supply chain management is complex, challenging, and continually changing. It involves all mega-supply chain processes - PLAN, BUY, MAKE, MOVE, STORE, AND SELL - while including issues such as trade regulations, customs, security, trade finance, cost accounting, international taxes, technologies, and risk mitigation. These issues, and related competencies, are not prevalent in domestic supply chains and are not found in most educational programs.

Most surveys continue to find serious gaps in knowledge and experience in global supply chain management. Fewer than 20 percent of supply chain managers have enough knowledge to plan globally. Even fewer have the experience to manage global operations effectively. While some will learn global logistics and the physical supply chain, they will fall short in understanding trade finance. And some may learn cargo security regulations and compliance, but fall short in understanding the international tax implications of routing logistics flows.

Often, a lack of knowledge causes global supply chain performance measures to be limited. Definitions of cost, time, and service are far different in global operations than those of domestic. Working capital tied up in inventory, for example, is not so important with four weeks of supply as it is with 12 or more weeks. And, the measurement of Total Delivered Cost is far different when product is sourced in China and sold at retail in the U.S., than when shipped overnight from a domestic plant.

Going forward, global supply chain managers MUST develop enough working knowledge to advise senior executives and plan for global expansions. It will be unacceptable for multiple departments to have to consider individual issues for weeks or months in order to advise C-levels on what, where, who, why, and how to BUY, MAKE, MOVE, and SELL, and what the related implications are.

The Outlook

In 2010, more global supply chain managers will step up to learn more about doing business globally. Their companies will demand more ideas, faster responses, and better identification of complete choices. The critical success factors for competitive advantage will return to new initiatives in cost management, profitable growth, and service differentiations - all of which have global implications. Supply chain managers need to be in the forefront of the recovery, as well as become competent business advisors.