Many veterans laboring in the world of supply chain essentially fell into the job. Perhaps they came from another department, without even realizing that the discipline existed. There were few mentions of supply chain in business school, and even fewer formal university programs. Today, that has all changed. In this conversation, excerpted from an episode of The SupplyChainBrain Podcast, Jim Barnes, managing director for ISM services with the Institute for Supply Management, discusses the skills and job requirements of today’s supply-chain professional. He also reviews the effectiveness of certifications, internal and external training programs, and “virtual learning” techniques.
Q: In the old days, if people wanted a job in supply chain, they might or might not go to college and get a degree for it. Instead, it was a matter of learn by doing — on-the-job training. What’s wrong with that way of training employees in today’s supply chains?
Barnes: I think you’re absolutely right. Supply chain was one of those careers that was less professionalized than others. The professionalization of supply-management jobs has been on the upswing for a while now. The reason is that supply chain has become much more of a critical component of the company’s making a profit than in the past. Having more than just tacit knowledge of on-the-job training is required in order to execute well.
Q: Unlike in the past, a person entering the world of supply chain today might actually be doing it on purpose. Previously, most people who ended up in supply-chain jobs didn’t start that way, or had no awareness of the existence of supply chain as a profession.
Barnes: You can see that in the programs that are out there now. Fifteen or 20 years ago, there might have been a handful of them — Arizona State and Michigan State, for example — and now you’ve got many, many more. Young professionals are pursuing supply-chain degrees, both Master’s and Bachelor’s, and that was almost unheard of not too long ago. They are younger and have a lot more educational background in the subject matter. Frankly, they grasp it more quickly, and they expect to make more of an impact on their jobs than would have been the case 20-30 years ago.
Q: On top of which, the skills that are needed of a supply-chain professional today, both at entry-level and beyond, are quite different than what they used to be. What do we require today that we might not have asked for in the past?
Barnes: The roles that people are playing in supply chain today are less tactical and more strategic. The types of skills are similar to the core competencies of the ISM Mastery Model. We have added things like business acumen, financial analysis, sales and operations planning, and understanding of systems. That’s in addition to the core processes that supply-chain professionals had to know in the past, such as inventory and materials management, category management, logistics and the like. A broader skillset is required, one that’s more strategically oriented. That’s due in part to the automation of certain tactical tasks that were performed manually for many years.
Q: What about the need for analytics skills? It’s a much more numbers-oriented profession now — no longer a seat-of-the-pants kind of job.
Barnes: That’s right. When we do training and strategic supply management, we spend a lot of time on the various analyses to be performed, relating to markets, cost and price, and financial matters. We often get feedback that those are very valuable tools and techniques, because they can be applied directly to the job. Whereas in the past, if you were performing a more tactical role — let’s say processing requisitions and turning them into purchase orders — you weren’t doing the kind of analysis that you can do today.
Some companies still haven’t created these more strategic roles in a very defined way. Someone might be more senior, but is still doing a lot of tactical work, and needs to apply these new tools and techniques in order to create a lot more value in the supply chain.
Q: Are companies today aware of the increased need for training, especially in supply chain? Or are they behind the curve?
Barnes: I think it’s becoming more universal. There’s a big shift going on. Supply chain is becoming more focused. The skillset has to be more strategic and provide more value. In certain industries that are struggling, like oil and gas, you’re not going to increase your bottom-line profit by growing sales 10 percent. In some cases, you’re lucky to hang on to the kind of revenue you’ve had. So where are you going to improve your profit? It’s going to be in the supply chain — through new efficiencies, better relationships with your suppliers and innovation. These are the things that companies are investing in, and that’s why training is becoming much more important.
Q: What types of in-house training programs are important these days, both in terms of new entrants and continuing education? How intense should they be? What resources should companies be expending on training?
Barnes: When they’re facing a tough time, the first thing companies will do is take money away from training. They’ll focus on reductions in forces and other things that can be of immediate benefit to the bottom line. But within six months to a year, they recognize the need to invest in training internally, which can come in many forms. It can be the type of training that helps people to understand the organization — who’s doing what, where to go to engage stakeholders, how the operation is trying to improve efficiencies. Then there are the external opportunities for training, like what ISM does, around training people for specific tools and techniques in order to get a return on investment in the effort. That’s very important as well.
Q: There’s also the question of whether you take employees offsite, and place them in educational settings that require them to be away from their day-to-day jobs. Or are you trying to train them during the workday? How do you incorporate training into the business day?
Barnes: That’s a good question. There’s a concept called 70-20-10. Seventy percent of the learning that happens, especially in supply-chain jobs, is on the job. (It was 100 percent a few years ago.) Twenty percent is through internal measuring and coaching. And about 10 percent is external. That formula allows people to learn new skills and bring in experts who might not reside within the four walls of the business.
Q: To what extent should a company rely on and develop internal training capabilities, versus outside training assistance, such as that from ISM and other consulting organizations?
Barnes: You have to have some in-house capabilities. A lot depends on the size of the company. We work with companies that are mid-sized, $500m to $1.5bn [in revenues]. They might not have the scale to maintain internal resources. Teaching them in workshops is an effective way to enable change. If we’re talking about global, multibillion-dollar companies, they have their own capabilities. Often they form supply-chain academies with playbooks on the right way to do things. We get involved with them as well, but it’s on more of a spot basis, or helping with overall road maps. Often it turns into “train-the-trainer” work. They can then go and do their own training internally.
Q: Mentoring has always been an important part of training within organizations, although not necessarily in a structured way. Is there a way to formalize mentoring, in addition to more visible types of training exercises?
Barnes: Formalizing it is OK if you’re going to do it around objectives. If you provide training and have action plans that require interfacing with other stakeholders in the company, the mentor can help guide, navigate, open doors and provide feedback in a formal way. But historically, mentoring is a less formal practice, and is more related to the natural interest that people take in one another.
Q: Is there a way in which companies can follow up training with a debriefing, in which newly trained employee offers feedback to the trainers as to the effectiveness of the program?
Barnes: Yes, absolutely. That’s a key ingredient to successful training. For example, if a company has a three-day boot camp around supply chain, that should be a continuous improvement project on its own. It should constantly evolve in terms of content, the manner of training and how it’s being applied. Everybody should have the ability at the end of any training to give an evaluation, and have that feedback mean something to the program. To do otherwise is to come up short.
Q: You mentioned boot camps. To what extent is that a literal versus metaphorical concept? For instance, should a new employee be placed in a so-called “boot camp” environment immediately?
Barnes: When we’ve been involved in boot camps, they’ve taken both new hires and leaders in the same course. The concept has involved more of a rigor-based approach, not just for new people as in the military. It’s folks who have been around for a while and probably need the change, as well as those who are new to the job and might even be more flexible. One program we do starts midway through the first day and goes until eleven o’clock at night, with homework after that. It’s like one of those “pain points” that you experience when you go through an actual boot camp.
Q: Talk about the importance of cross-training within the organization. It’s possible for an individual to get stuck in one aspect of supply-chain management forever. Should companies strive to make sure that doesn’t happen? Should they mandate that employees move around and are trained in other departments beyond where they’re comfortable?
Barnes: We’re seeing a lot of that. Folks are moving from one part of the organization to another to gain experience. In some cases it’s done excessively; in others it needs to happen more. It’s a bit of a balance. Another important consideration is that when training occurs in one part of the supply chain, it’s a good idea to spread the word about it to other functions. In working to improve procurement with strategic suppliers, for example, you might need to interface with engineering, product management or the operations shop. You should be able to get their assistance in specification or process changes. It’s really important that at least a taste of that training, and the meaningfulness of it, is communicated to other functions as well.
Q: At the very least, to give each function an understanding of where others are coming from, so that they’re not just thinking about their own needs. They actually understand what’s required of other so-called silos.
Barnes: That’s exactly true. A common exercise is RACI — for Responsible, Accountable, Consulted, Informed. It’s a diagram of who’s responsible for different situations, and who needs to be informed and consulted along the way. Often that’s a very interesting part of the training we do, in terms of the arguments that can come up about who’s really responsible for something. It points out the importance of heightening communication, and recognizing the person or role that’s accountable for something getting done.
Q: How important is continuing education? What should companies do to ensure that veteran employees are being continually trained, in new skills or in handling new concepts and requirements that come about as supply chains mature?
Barnes: That’s very important in supply chain, because needs have been changing constantly. We’ve seen an acceleration of supply chain’s strategic nature, because the ability to work well with others calls for certain skills that weren’t required 20 years ago. It’s critical that the folks who have been around for a while also go through the training. The other aspect is if you have more experienced people in training with new and younger people, they can mentor them, tell war stories and contribute to the workshop as well as learn.
Q: What about professional certifications, such as those maintained by ISM? I’m thinking of Certified Professional in Supply Management (CPSM) and Certified Professional in Supplier Diversity (CPSD). What exactly are these certifications, and what’s the value of acquiring them?
Barnes: The value to the individual is very tangible. We do a salary survey every year, and people with CPSMs and CPSDs have about a 9-percent higher salary level than those without it. It pays off, literally. In addition, those who get their CPSM or CPSD are more committed to lifelong learning. They need the continuing education hours in order to keep their certification. The certification itself is an exam — there are three for the CPSM, and additional ones for the CPSD. More and more companies are realizing the value of those exams, especially among corporate program members of ISM.
Q: More training programs these days are being delivered through the internet, video and virtual environments. What are the plusses and minuses of these training media?
Barnes: There’s been a lot of advancement lately in use of the Web for training. At ISM, we’re better known for onsite training, but these days we’re doing more of what we call “virtual learning.” It doesn’t take people out of their jobs for three days. It’s two-hour episodic training sessions on a topic, with homework in between. There’s a live instructor with a whiteboard, talking through problems and giving people exercises. You can even put individual training into virtual rooms, to work on problems together. It’s the next-best thing to onsite, face-to-face training. Of course, it has its limitations, but it does work quite well.
Q: What are the drawbacks of not being in the classroom with the instructor?
Barnes: The drawbacks have to do with the fact that you can’t do virtual learning for three or four days straight. You don’t get that continuum of conversation going; it stops and starts. You have to catch up every time. The other thing about virtual learning is you’re not there in person. The emotion is missing, and when you’re training, that has some value. Also, you can run into technical difficulties — you can have the video or audio fail, or people are using different equipment. It’s not a perfect world, for sure. But when you can hear and see and it’s working well, it’s a lot better than individual e-learning online courses. Their value is being asynchronous.
Q: What are the biggest skill gaps you see out there right now?
Barnes: This might sound quite basic, but it’s understanding cost. Supply-chain professionals, especially on the procurement side, have been pushing suppliers on price since the beginning of time. Getting your arms around cost, and understanding the concept and application of total cost of ownership, is becoming a much more common objective. It leads into the notion of “should cost” — what should the cost be for whatever’s being produced?
The other area that has always been popular is negotiation skills. It’s an art, not a science. It takes practice. Getting more exposure to negotiation training and role-playing is something that’s in high demand today.
Institute for Supply Management
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