It is inevitable at a time of such economic turmoil that we wonder about our own job security. So how threatened are those in the contract management, legal and procurement community? And are there steps we can take to bolster our position?
Of course, it has now become the flavor of the day to issue lists of ‘The Top Ten Secure Jobs’. There is surprisingly little overlap in the views of the ‘expert’ commentators on what these ten jobs are. And I am quite sure we could found counter-positions for many of them.
But there are some trends and some opportunities. For example, it is generally true that public sector jobs – at least short-term – may be more secure than private sector. But for how long? And to what extent will shifts in public policy result in new opportunities for some, but work elimination for others?
Another key area relates to the management of trading relationships, at both an individual and portfolio level. Company survival depends on the ability to oversee effective supply and customer relationships. This means not only superior selection of the right partners, but also continued oversight of performance. As one of the ‘experts’ puts it, “with the widespread awareness that excessive risk-taking got banks – and so the wider economy – into their current difficulties, companies are stepping up their efforts to monitor potentially disastrous transactions and to comply with the tighter regulations that the financial crisis is bringing.”
This recruiter calls such professionals’ Compliance/Risk Officers’ – and indeed that is one possible title. But interestingly, this is an area of development that has not proven especially successful. Most risk specialists seem to be focused in rather narrow areas of financial risk and are somehow blind to wider commercial risks and policies.
Compliance is another area that has failed to deliver the expected benefits. Once again, the role has tended to attract quasi-auditors who police the wrong-doing of others, rather than seeking out the reasons for delinquent behavior and driving innovation and change to address its root causes. As a result, compliance specialists tend to be viewed by many in the business as a source of risk (and to be avoided), rather than as managers of risk (and to be welcomed and included). After all, how many people welcome visits from the auditors? And what executive really equates audit with long-term business growth and profitability?
Business success in these tough conditions will depend on people who have the characteristics needed to make balanced and objective decisions. In the area of trading relationships, there are several criteria for success:
- Breadth of view. Creating the right commercial offerings and deals requires people with a cross-functional perspective and an innate understanding of the sources of risk and complexity. They must have a strong appreciation for business capabilities and potential – in other words, does this commitment make sense?
- Communication skills. These are roles that demand the ability to both listen and speak. They require clarity of expression and a talent at making complex situations easy to understand. This means building rapport with key stakeholders and speaking in terms they understand. It means being assertive, not confrontational; encouraging openness, not secrecy or blame.
- Objectivity. Much of the need for compliance is driven by the skewed behaviors driven by corporate management and measurement systems (including bonuses, incentives etc.). Therefore it is critical that those who are required to make these ‘balanced business decisions’ are not part of this bonus and incentive structure.
In such uncertain times, many groups vie for positions of increased power and influence. It is human nature to do so. But having the loudest voice or historic influence does not mean that they are equipped for this dramatically different world that we now face. Indeed, they were frequently part of the problem, so may be singularly ill-equipped to be today’s solution.
There is little doubt that some within the commercial, contracts, legal and procurement community have the personal skills and knowledge that fit them for this key role in ensuring effective governance in the formation and management of commercial policies and trading relationships. Others have some elements of the required skills, but must acquire more if they are to deliver enhanced value.
The challenge for most is the issue of leadership and credibility. Among the questions you might ask as you ponder your future are:
· Do you have the functional leaders who are prepared to put their heads above the parapet and position themselves for this critical role?
· Have you prompted those leaders, have you encouraged them by demonstrating your readiness for the challenge?
· What evidence do you have to show your readiness for these tough times, or the steps you are taking to differentiate yourself from those around you?
Times of great uncertainty are also times of change – and therefore represent opportunity. But those opportunities do not simply seek out those who sit and wait. They fall to the people who demonstrate their readiness to bring solutions, to drive improvement and ensure economic survival for their company.
So the final attributes that can get you noticed are those of determination and innovation – taking the initiative, promoting new and improved ideas, demonstrating personal commitment. These are all areas where IACCM can help – indeed, is helping many individuals and functional groups right now. At times like this, the true leaders draw on their networking skills, discover and develop ideas, equip themselves with the facts and the data that get them – and their people – to a position of greater status and security.
Discover more about how IACCM can help by writing to info@iaccm.com and outlining the challenges you would like to tackle. In addition to advisory services, IACCM can assist with research, benchmarking, training, professional certification, networking, job search, process design and amny other areas of personal development or organizational capability.
“Forecasts emanating from market economists are suggesting a surge in bankruptcies in the coming months and through next year. Today, we are completely blind to the risk that exists within our supply base. So with the likelihood that there will be supplier organisations facing financial difficulties, I’d like to get some advice on how IACCM could assist us to develop an approach to supply risk management and the tools and methodology we should be considering in the design of our solution.”
This request is typical of a growing number hitting my mail box. My reply appears below. There is no quick fix, though there are short-term steps that can reduce both probability and consequence of failures.
“You are of course right that this is a major topic for every organization right now and many are not well prepared to make the necessary risk assessments – nor for determining what they will then do once the risk has been identified.
In the end, the assessment options are fairly limited.
Companies that have strong SRM programmes are probably best placed, because these mean that they have identified critical / strategic suppliers (especially sole source situations) and are likely to have built-in relationship review procedures.
A second tier of companies have some level of on-going financial monitoring, whereby they do at least check the published accounts and credit ratings for their top-tier supplies. Some have outsourced or off-shored this activity – and that might offer a rapid way to improve your own situation.
Whatever method has been adopted, the challenge in current market conditions is that even healthy companies may be challenged either for cash, or because of the weakness of their supply or customer base.
Inevitably, some may see massive erosion of revenue based on their exposure to specific industries. However, at a minimum, you should urgently assess any sole-sourced agreements anddetermine the time and difficulty of either replacing or dual-sourcing those suppliers.
But moving beyond the question of risk, we get to the challenge of a solution. If you identify potential failure or weakness, what do you do about it?
Obviously many will look to potential switch to stronger suppliers (but the stronger supplies may not have capacity because others will do the same), encourage mergers (but that takes time), consider a dual or multi-sourcing policy, or purchase increased buffer stock. Beyond this, depending on your own financial strength, there may be situations where you consider funding or otherwise supporting your supplier, for example as a guarantor or through more generous payment terms, or even through taking some stake in their business. Finally, you might consider in some situations bringing the activity in-house.
This is a very high level summary of what I am hearing and seeing. IACCM could certainly pull together some sort of forum – physical or virtual – to enable a sharing of experiences and techniques. Of course, whatever solution you adopt, it will demand some combination of extra resource and money.”
In e-sourcing forum, Charles Dominick highlights the reluctance of many Marketing groups to acclaim the success of their Procurement organization as a source of competitive advantage.
The point he makes is interesting and in my experience, sometimes valid. However, as a negotiator from the other side of the fence (sales contracts), i have a different view on why companies are sometimes hesitant to boast about procurement success.
When I negotiate, if I highlight the quality of the procurement group’s efforts – at driving lower prices, or generating superior reliability, or cutting lead times – then it is certainly correct that customers value this. So of course the immediate question (from one of those talented procurement professionals sitting opposite me) will be “So where are those benefits reflected in your contract?” They immediately turn my achievements around on me to look for ‘superior’ terms and conditions or lower prices.
Now that is fine if I can indeed demonstrate that I do offer better terms – shorter lead times, higher damages for failure, lower cost of ownership, superior guarantees or service levels. But few Sales organizations have this level of competitive intelligence – we rarely know in detail what competition is offering or what they may be desperate enough to match. So making these boasts means I had better have verygood market intelligence and also that I have extremely good supplychain integration – by which I mean true flow through from market requirements down to the very lowest level of supplier.
Second, in today’s inter-connected world, many of my major customers are also my major suppliers. It is not always smart PR to suggest that I am somehow screwing my customers – yet that is the way that Procurement success stories will often be read, especially when so many of them still gravitate around driving lower costs.
“Here is the burning question with respect to the industry – how are folks benchmarking the respective performances of internal shared services organizations, external nearshore providers and offshore providers in the procurement arenas?”
This question came into my mailbox over the weekend. It reflects similar requests that have been posed recently at conferences and IACCM breakfast seminars, so here is how I replied.
Benchmarking
The reason that benchmarks struggle – in my view – is that it is very hard to find like-for-like comparators. The best benchmarks would look at relative process performance, focusing on outcomes. But when performing such research, you find such disparity of organization and roles that you soon realize there are too many variables to decide what it is that led to the superior performance!
For example, as we look at Procurement groups today, we see growing divergence in their role and status. We see some that are being pushed into a fairly narrow vendor evaluation role (perhaps as commodity choice experts), while others are expanding to cover full life-cycle supplier relationship management. Just this week, I have encountered major groups where in one case, all contracting work has been taken away from Procurement, while in another they have lost out on the SRM role and yet in a third they now have both these roles added to their responsibilities!
In order to make benchmarking meaningful, you need consensus on the primary values that you want to achieve from Procurement activity and how these will be measured. Then we can look at comparative performance in other organizations based on those values / measures.
Organization
I believe that it makes sense to establish the shared service with a view to using that as the precursor to decisions over outsourcing / offshoring. In other words, the shared service approach is the right umbrella and is not an alternative to outsource / offshore, but a prerequisite to their success.
For many groups, the move to a shared service is the method by which they ensure consolidation of resource and harmonization of role, to create a group that is capable of oveseeing organizational performance (whether internal or outsourced). Until then, there is often a fragmented process and potential inconsistency in the way that procurement services are delivered around the business. So while an instant move to offshore or outsource may yield some cost savings, it will frequently do so at the expense of service quality.
All this said, the process definition associated with the creation of an effective SSU structure is the forum that allows proper discussion of where tasks will be performed. From this, you can then derive the optimum ways to deliver on those tasks –i.e. through automation, through remote resources, through service centers, through expert teams. It is within this analysis that opportunities for outsource / offshore rapidly become evident.
IACCM approach
The primary way that IACCM is assisting members with this questions is through two primary activities:
1. Capability Maturity Assessment. An on-line survey tool that can be deployed to get internal views of current performance (providers and users of the service). This generates a benchmark (against other companies that have undertaken this study) for each major performance characteristic (e.g. skills, knowledge management, leadership etc) and gives a sense of the overall performance strengths and weaknesses.
2. Process design workshop. As outlined above, analyzing the tasks to be performed with a view to process optimization. Organizational design and roles are an outcome of this.
An alternative approach is to focus on specific companies that appear to be ‘best of breed’ and to conduct interviews. We are doing this very successfully for several companies at present, on a variety of topics.
Years ago, when I was working at IBM, I observed how contract terms were written to reflect the goals of internal stakeholders, rather than the values of the market. This caused conflict and frequent non-compliance; it also drove regular demands for re-negotiation.
IBM’s reaction (like that of many other companies) was to apply more resources to ensure no deviation, or to support controlled negotiation. Costs spiralled and customer satisfaction fell. Meanwhile, management had no visibility of what was going on – they simply saw mounting complaints and growing dissatisfaction with the company’s claims to be a ‘solution provider’.
IBM fixed those problems and recovered its market leadership position – but deriving high quality management information to drive business change remains challenging for most companies. There is still a tendency by most support functions to believe that they alone know what is good for the company and that suppliers or customers (aided and abetted by business managers and Sales) are intrinsically unreasonable and potentially dishonest.
Hence ‘compliance’ is a major feature in most organizations and has been a key function of many software applications, especially in Procurement. Yet blind compliance is not only undesirable, it can destroy market relationships.
So I am delighted to see a number of leading application providers grasping this issue and focusing on the quality of management information and reporting. The latest is Emptoris, which has expanded its suite to offer ‘more actionable insights and greater agility’ in managing procurement and contract relationships.
The new portfolio includes sourcing intelligence and contract performance visibility, to support improved decision-making at all levels of the organization. These enhancements move us closer to a world where groups like procurement and contract maagement can begin to demonstrate value based on relationship outcomes. They also ensure that such groups will be able to offer a more strategic perspective, due to the value of the information they control.
In order to take full advantage of the power of these applications, it is critical that contracts, procurement and legal groups start to re-think many of their traditional metrics. The values embedded in today’s service level agreements and balanced scorecards do not yield actionable data. Intelligent organizations, using the power of the tools that Emptoris has now made available, have an opportunity to drive significant competitive advantage through superior partner selection and relationship management.
“A team is as strong as the relationships within it. Always want more, always give more. Stick together. Focus on being mentally stronger and always keep going until the end. Show the desire to win in all that you do. Enjoy and contribute to all that is special about being in a team – don’t take it for granted.”
This advice might have come from many inspirational business leaders – and I will identify its source a little later – but the real point here is the applicability of these sentiments to anyone seeking sustained success. How many of these behaviors are truly endemic to the environment in which we work? Far too often, I encounter corporate cultures where the readiness to find fault, to criticize and to apportion blame is close to the surface. Rather than lauding what was done right, or working together to improve, there is a readiness to highlight the problems and inadequacies of others. Today’s environment of fear, where regulatory and reputation risk play into the hands of groups with control instincts, is increasing many of these internal frictions.
A lack of trust inevitably leads to exclusive, rather than inclusive, behavior. Groups like Procurement, Legal and Commercial / Contract Management are frequent victims of exclusion, or indeed seek to exclude themselves, believing they are in some way ‘special’ or ‘too busy’ to be part of the core team. As a result, “We were involved too late”, is a frequent cry. Or, “We could have warned them about that if only management had included us.”
Victims remain victims unless they take control. And speciaists become increasingly irrelevant and exposed if they do not find way to integrate. We become part of the team through our commitment to its success, not by right. So the groups I observe struggling are typically those wth a focus on control and compliance, those that depend on the whims of executive management for their inclusion and influence. Groups like these are not seen as team players – they are seen more as auditors or line judges.
So what does our management guru advocate? He focuses on getting talented people to work together. And to do this, he hires good players, though he never overpays and does not want people who will disrupt the overall rewards pattern. He focuses on building teams with a clear sense of identity and common purpose. They are required to prepare thoroughly and then trusted to take their responsibility seriously.
How might we go about building such winning teams? One key characteristic that we have been promoting at IACCM is the commitment to empower. If we work to enable others and to apply our talents only when they are truly needed, not only do we become more valued, but we also gain increased status and respect. This point was emphasized recently by Tammy Erickson in a Harvard Business Review blog: “Increase your firms ‘collaborative capacity’ by building relationships and encouraging knowledge exchange …. Find ways to help your organization become more spontaneous, innovative and reflexive. Pass the ball.”
Of course, another basis of judgment will be to measure results over time – how often do you win, to what extent are the desired outcomes achieved, and what patterns can be identified to ensure lessons are learnt and improvements continuously made?
So to build winning teams, we must focus on enabling others. It must be obvious that our commitment is to team success, not personal glory. We must get out of the way when we have limited relevance or added-value; and when we are involved, we must share information and work towards finding solutions, not problems.
For many of us today, this challenge in fact goes further than just our own organization. ‘The team’ is increasingly composed of people from multiple companies and cultures. Success can only occur if it is achieved by all the players. That means our philosophies of teamwork must increasingly extend across a network of organizations – suppliers, sub-contractors and customers. The common purpose may be a successful outsourcing initiative, or a major construction project.
Therefore the development of powerful teaming instincts and methods will increasingly be a key competitive advantage, bringing speed, quality and agility to business operations. It is an area in which we can bring leadership (for example, in designing negotiation or post-award contract management methods); but whether as leaders or participants, the critical issue is that we must exhibit collaborative behaviors. “Enjoy and contribute to all that is special about being in a team.” In other words, recognize that teamwork is not a threat to our power or authority – it is in fact a pre-requisite – and in addition to that it can be fun!
So who is the management leader who made our introductory quote? It is Arsene Wenger, coach at Arsenal Football Club. And his words were not written for publication – they were a reminder to his team of the values he instils and expects. As a fan of Tottenham Hotspur, Arsenal’s great rivals, I hope he has got it wrong. But given results over recent years, I suspect he has not! So in the interests of teamwork, I suppress my natural instincts to belittle Mr Wenger and his team, and instead pay tribute to his achievements and contribution to knowledge exchange.
We move in cycles …
The South Sea Bubble, Tulip Mania …. during times of great change, we experience great scams. Get-rich-quick schemes from which the perpetrators generally escape with tremendous riches, the late-comers get the blame and the investors carry the cost. And the politicians – well, wise after the event, they pontificate and promptly take action to close the stable door.
The financial services ‘bubble’ burst, with an air of great inevitability. Of course no one believed it would last (at least not in retrospect), but the truth is that it was simply too complex for most people to understand what was going on.
The situation today is just a taste of the complexity that will challenge all of us in this fast-changing networked world. We do not know what will happen. So we must focus on how we can best manage uncertainty, not how we can create certainty. Rigid rules are not the answer – unless the solution to bad business is to have no business.
The rules for risk management are being rewritten – and I will write more about that in a future blog. Today, I focus on the fact that many industries, many companies have not got it wrong. The ills of a few big names in one specific sector should not be allowed to drive public policy. The politicians – quite rightly – feel embarrassed and stupid. They are paid to oversee these things; sadly, many were either lacking the expertise, or they were paid by the perpetrators, in campaign fees and political funding, so had no incentive to understand.
So now they feel obliged to exact retribution. But if we are not careful , their retribution will simply damage competitiveness and punish only the people it is meant to help.
Let’s look on the bright side. Today. IACCM released the results of its study of the 25 Most Admired Companies in post-award contract maagement. As this study shows, most corporations have simply been moving ahead wih increasingly responsible risk management and governance regimes. The last thing they need is more regulation. They are already suffering from the credit crunch and drying up of demand – let us hope that the ignorance and populism of most politicians does not now turn a crisis into a catastrophe.
Earlier this week, I presented to a large – and highly regarded – supply management team. One of the questions that was posed related to the question of whether there can ever really be trust between buyer and supplier.
“In your presentation there was a slide relating to the focus of relationships, with “cost” on one side of the spectrum and “innovation” on the other. One of the points discussed was that we need to carefully consider what type of relationship is appropriate for each area. We have often over-commoditized our thinking by focusing too narrowly on cost, at the expense of commitment and innovation.
In my experience, I have seen a tendency to swing back and forth between the extremes. For a time the focus is on cost, but we end up with suppliers that are so lean that they cannot keep up with new trends. Then we shift to building long-term relationships based on trust, but after a while we discover that the partnerships have become too comfortable, and we find ourselves at a competitive disadvantage.
How can we utilize our contract management tools to foster commitment and encourage innovation, yet maintain a competitive edge? Can we nurture long term partnerships that do not become complacent?”
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Why the swings back and forth? Often we find that these are driven by leadership changes, rather than any real shift in strategic needs of the business. If we are to build and sustain trust, it is critical that supply management leadership understands the impact of inconsistent behavior and is ready to deal with its consequences. Trust, once corroded, is awfully hard to rebuild.
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How are you choosing the partners for long-term relationships? When I talk with organizations – buy-side and sell-side – they often highlight their desire for closer relationships with the other side. When I explore what they mean, they are in fact often expressing a desire for collaboration based upon relative power. In other words, where they feel relatively less powerful, they want collaboration, but in those relationships where they feel powerful, they don’t care. The point here is that collaboration has to be a mutual desire, driven by mutual self-interest – it cannot be manufactured.
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Building from this point, the onus is on the party proposing collaboration to identify the reasons why it will be mutually beneficial. In the end, this is a question of the economic benefits that can accrue – but the driver for these could be reputation, innovation, cost benefits, reduced risks etc. The key is to discover the formula and to have both sides convinced that a long-term, stable relationship has benefits that outweigh the traditional ‘stop-go’ approach of power-based negotiation and supplier management..
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Once the formula is understood, there is something specific to be regularly discussed and monitored. And if the benefits are truly there, it will be in the interests of both parties to demonstrate to the other that they are still ‘playing the game’. With today’s technology, you should unearth ample means to enable free information flows between the parties. After all, if it is truly a relationship of trust, there will be nothing to hide.
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It is also essential that the parties are mature and honest enough to understand that relationships do not stay the same for ever. The original drivers may change – new products, new markets, new technologies, new competition could erode the original basis for the collaborative arrangement. The key here is to have a fair and equitable basis for its dissolution and this should be embedded into the agreement (essentially, a pre-nuptial).
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So bottom line, a key shift here is to stop thinking about your need to gather evidence of wrong-doing and instead focus on the way you will each provide on-going reassurance to the other.
From these observations, I am sure you will readily see the point I made about the negotiation and contracting process creating a governance framework for high-performance relationships. But of course, it is not every relationship – and while collaborative instincts should permeate all long term relationships, there will be matters of degree, driven by the scale of the economic gains.
The press yesterday carried three stories that revealed mixed fortunes in Government and Federal contracting. A major project success in the UK was counter-balanced by two examples of where things can go wrong if governance fails.
Public sector projects are rarely highlighted for their success, so it is good to see that a major contract to transform the UK’s employment and social security offices has been commpleted on time and under budget.
The $3.5bn project ran for 5 years and merged 1,500 separate offices into a streamlined 800 Jobcentres. It has been hailed by the UK parliament’s public spending watchdog.
The elements that generated success are not complex, but are frequently missing or compromised. They were:
- Leadership was consistent throughout the project. Changes in leadership are frequently associated with failure.
- Project teams were appointed and sustained throughout the progam. They brought extensive experience to the task.
- The project took guidance and drew heavily on materials and advice on past big projects from the National Audit office and Office of Government Commerce.
Moving across the Atlantic, the long-running saga of a $35 billion contract for flight refuelling aircraft shows no sign of ending. Despite the apparent threat to national security that on-going delay implies, the US Government decided to make no decision on progressing this award, leaving the in-coming administration wth the problem.
This story began in 2002, when a contract awarded to Boeing unravelled followign exposure of improper practices during the award phase (actions which resulted in imprisonment for both Boeing and Government pesonnel). Subsequent competition resulted in a major win for EADS and their US partner, Northrop. But now it was the turn of Boeing to cry foul – and to whip up nationalistic fervor among politicians with claims of job losses and decisions contrary to the national interest.
Will the EADS contract be re-affirmed? Will the bidding process be re-opened? Despite promises to reach resolution before November’s election, yesterday’s announcement revealed there will be even more delay – and meantime, the US Airforce continues to operate with a seriously outdated fleet of re-fuelling aicraft.
Another sad example of the extent to which politics can so often get in the way of good governance.
Back in the UK, the stream of Government embarrassments over data loss claimed a victim when PA Consulting had a three year contract terminated because of its falure “to live up to contractual obligations”. An employee had ignored security rules by downloading data to a memory stick which was then lost.
The Government is reviewing other, more lucrative contracts with PA and some other private sector providers. However, a series of incidents have revealed the challenges of maintaining control over sensitive data. And as an Opposition spokesman observed: “It is not good enough to claim that the clauses in the contract were robust, and pass the buck to a consultancy that (the Minister’s) department hired and was responsible for supervising.”
In other words, many of these hard-fought contract clauses offer no more than a worst-case scenario fall-back. They do nothing significant to recover a bad situation. As with so many instances of failure, the real issue is increasingly the inadequacy of governance procedures to encourage and oversee performance related to complex risk issues. Perhaps if we were all less focused on imposing rigid terms, inflexible rules and compliance, we might spend more time discussing and designing robust and shared responses to risk and creating innovative approaches to performance monitoring and management. Just as this problem has in large measure been created by modern technology, it seems likely that technology will play a major part in its resolution.
For PA Consulting, the blemish on reputation will prove far more damaging than the withdrawal of a specific contract. Certainly, future business for PA and other service providers is likely to depend on their ability to demonstrate far more robust capabilities in data protection and security. All contract negotiators can expect increased emphasis on these aspects of contracting. Will we respond by more entrenched battles in the negotiation, or by developing reliable solutions and associated commitments?
A recent study by McKinsey confirms that senior executives are increasingly concerned about the risks facing their supply chains. They also feel that supply chain management is failing to deliver adequtely against top strategic goals.
The fact that risks are perceived to be increasing is scarcely a surprise. However, the extent of regional variations in the areas considered to be influencing supply chains is interesting. For example, in North America the top three concerns are rising energy prices (39%), financial volatility (38%) and increasing complexity of products and services (35%); in Europe, product and service complexity is cited by 60%, followed by rising energy prices (33%) and increasingly global labor markets / rising wage costs (25%). Developing markets select the same three issues as North America, though in different sequence.
Other factors influencing supply chains show wide disparities. For example, 25% in North America see the adoption of increasingly scientific, data-driven management techniques as significant, against just 4% in Europe (and 16% in developing markets). Similarly, 20% of North American and Developing Market participants are concerend about exposure to differing regulatory environments in overseas markets, versus 9% in Europe.
The strategic goals for supply chains reflect the findings of a recent IACCM survey. Reducing costs is the number one priority, followed by improving customer service and getting products to market faster. For suppliers, assisting with these goals woudl represent a source of competiive advantage, since executives are far from satisfied with current progress.
To improve performance, they are focused on increasing the efficiency of supply chain processes (71%), actively managing supply chain risks (56%) and increasing inputs from low cost countries (47%).
The survey also reveals a continuing trend towards centralizing the management of supply chains. In part, this is to address talent and knowledge issues – indeed, ensuring that different locations share knowledge emerges as the number one challenge in global talent management (again a finding in common with the wider IACCM membership). Other major challenges are managing communications and cultural differences and attracting and retaining entry level talent. The issues of communications and knowledge sharing are to some extent attributed to the (lack of) integration of IT sytems and vendors on a global level (these pre-requisites were highlighted in a recent story about P&G’s success in developing global shared services).
Executives do not identify any one’big issue’ in globalizing the supply chain. However, the importance of increased cross-functional collaboration is highlighted as a dependency in meeting strategic goals. This suggests that organizations adopting the IACCM ‘best practice’ service delivery model will gain a competitive edge on their more traditional rivals.
Commitment Matters 