key supply strategies for tomorrow ak kearney

8/3/2019 Key Supply Strategies for Tomorrow AK Kearney

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Ke Supp StrateiesFr TmrrwPerspectives on the Future o Purchasing and Supply


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A.T. Kearney appreciates the insights and knowledge of

the following study team leaders from CAPS Research and

their contributions to this paper:

Phillip L. Carter, D.B.A., Executive Directr r CAPS

Research and Pressr Supp Chain Manaement,

Hard E. Fearn Chair in Purchasin, W. P. Care Sch

Business at Arizna State Universit, Tempe, Arizna.

Joseph R. Carter, D.B.A., C.P.M.,Avnet Pressr, Depart-

ment Supp Chain Manaement, W. P. Care Sch

Business at Arizna State Universit, Tempe, Arizna.

Robert M. Monczka, Ph.D., C.P.M., Directr, Strateic

Surcin and Supp Chain Strate Research r CAPS

Research, and Distinuished Research and ISM Pressr

Supp Chain Manaement, W. P. Care Sch Business

at Arizna State Universit, Tempe, Arizna.


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A.T. Kearne | KEy SUPPly STRATEgIES FoR ToMoRRoW 3

disintermediated as manuacturers in devepin

cuntries expand their capabiities int desin,

nance and distributin.

Increased ba cmpetitin wi ue cn-

tinued merers and acquisitins. Prir t enterin

int deas, crprate bards wi require supp

manaement t evauate pprtunities and risks.

What cst savins are achievabe thruh new

ecnmies scae? What is the untapped vaue

ainin access t the acquired cmpans supp

base? What disruptinssuch as severed rea-

tinships with vaued incumbent suppiers and

the intrductin new, untested suppiers int

the supp netwrkcud resut rm the dea?

Supp bases wi as cnsidate, which wi

chane the baance pwer between sme buers

and seers. A substantia chaene wi be psed

b the need t prject which suppiers wi achieve

the best psitin in rder t estabish strateic

aiances r ke ds r services.

Cmpanies wi experience bth interna and

externa pressures t respnd t envirnmenta

The initia erts t update and

expand ur 1998 studThe Future

of Purchasing and Supply: A Five-and Ten-Year Forecastbean with a

research a t prbe three ke areas:

Howwillsupplymanagement

evve in the next ve ears?

What chanes wi ccur t

supp strateies, supp man-

aement prcesses and supp

manaement enabers?

Beyondveyears,howmightthe

externa and cmpetitive envi-

rnments chane r businesses?

What chanes cud resut r

business mdes and strateies?

Adecadefromnow,whatcould

supp manaement k ike?

What majr transrmatins

cud externa rces and business

chanes drive? What miht these

chanes mean r new market

pprtunities r technies?

T ather rst-hand views,

chie prcurement cers and ther

hih-eve supp chain strateists

participated in cus rups, cn-

erence cas and ne-n-ne inter-

views. Fcus rups were hed inAtanta, Chica, Daas, New

yrk, Mian, Madrid, Amsterdam,

S Pau and Mexic Cit.

Additina, participants cm-

peted an nine surve that

expred ve ke areas:

Forcesofchange.The deree

t which marketpace and cm-

petitive rces aect the cm-

pans business mde.

Businessstrategyelements.

The imprtance varius ee-

ments the business strat-

e n the uture success the

cmpans business mde.

Supplymission,goalsandper-

ormance expectations. The

imprtance varius eements

supps missin, as and perr-

mance expectatins in supprtin

the cmpans business strate.

Supplystrategies,processes

and enablers. The impr-

tance and deree impe-

mentatin mre than 100

supp strateies, prcesses andenabers r achievin the cm-

pans supp missin, as and

perrmance expectatins.

Supplymanagementmet-

rics. The expected manitude

and directin chane in ke

supp manaement metrics.

We received 99 cmpeted sur-

ves, which suppement the data

athered rm the 113 supp man-

aement executives wh participated

in meetins and teecnerences with

the research team. This wide reach

ives credence t the vaidit and

reiabiit the cncusins and

recasts cntained in this reprt.

This paper ers a hih-eve

view the stud ndins and

A.T. Kearnes perspectives n

them. A separate, cmprehensive

stud reprt rm CAPS Research

wi as be made avaiabe at

www.capsresearch.r in a 2007.

About the Study


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KEy SUPPly STRATEgIES FoR ToMoRRoW | A.T. Kearne4

cncerns and avid cmprmisin situatins

arund aspects such as endanered fra and

auna, and use and abuse, putin cntrs and

cimate chane. Cmpanies wi be expected t

take actin t minimize ba warmin, cntrib-

ute t sustainabe ecnmies, recce their prd-

ucts and packain, and mitiate the impact

emerin technies such as bi-

enineerin and nantechn.

The rise vernment re-

uatins centered n areas such

as crprate vernance, prduct

saet, hmeand securit, pri-

vac rihts and inteectua prp-

ert rihts wi cntinue. The

increasin risk and cst nn-

cmpiance wi rce cmpanies

t devte sinicant resurces t

manain cmpiance issues

and t extend these checks int

the supp base, which ten -

ws a dierent set custms and reuatins

rm thse the cmpan that puts its name

n r ses the ds (cncerns arund chid

abr and wrkin cnditins in rein act-

ries, r exampe).

Corporate Evolutions Eect on Supply

Whie externa rces wi sinicant aect

supp, new cnsideratins arund crprate

strate wi as rce chanes t the supp

manaement unctin.

Business models and strategies. our

research indicates that cmpanies wi devep

and emp new business mdes eared tward

imprvin bth the incme statement and the

baance sheet t respnd t externa rces and

new market pprtunities. Chanes t the busi-

ness mde wi brin majr impicatins r

supp manaement.

Cmpanies wi w severa strateies t

increase revenue. Fr instance, thse enaed in

heav manuacturin ma k t brin in new

business thruh maintenance, repair and ther

services. Caterpiar has dne this with its reman-

uacturin business, which ives secnd ives t

d diese enines and ther parts. Prducers

branded cnsumer durabes ma enter emer-

in markets r expand saes int such markets,

which wi require taired prducts and packa-

in, and ca surces supp and prductin.

In man industries, sme cmpanies wi mve

up the vaue stream t becme desiners, mar-

keters and sstems interatrs, eavin behind

r utsurcin traditina research and devep-

ment and manuacturin capabiities.

Cst reductin wi remain a ke strate in

the cmin decade. Imprved cst structures wi

enabe cmpanies t cmpete in devepin mar-

kets and meet the chaenes new cmpetitrs

rm w-cst cuntries in their hme markets.

Cmpanies wi as pursue a variet strate-

ies t reduce xed assets, and suppement these

erts b maximizin the ecienc, fexibiit and

mbiit the assets the retain t respnd best

t chanes in custmer demands and surces

Cmpanies must embrace China

as both a market and a supply

base, withut bein mpic t

emerin pprtunities esewhere.


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supp. Cncurrent, cmpanies wi cntinue t

reduce wrkin capita requirements t increase

cash fw.

Mission, goals and perormance expecta-

tions. Tmrrws supp missin and as wi

be brader and mre tiht inked t the strateic

bjectives the business than tdas. Supp wi

be expected t deiver aainst its current perr-

mance as whie psitinin the supp base t

supprt the uture. leverain increased innva-

tin rm suppiers wi create tihter, mre strate-

ic reatinships. Cmpanies wi k r suppiers

in reated industries that can adapt their ideas

and capabiities t a new settin. Nntraditina

surces innvatin, such as desin huses r

universit researchers, wi becme a ke cmp-

nent the vaue chain. Supp manaement ra-

nizatins must prper interate a parties int

the cmpans new prduct and service devep-

ment prcess, and encurae cabratin amn

suppiers t increase vaue.

Because cmpanies wi cntinue t cnrnt

an ever-widenin rane risks, supp risk mit-

iatin wi be increasin emphasized in the

cmin decade. Extended ba supp chains

that incude eraphica distant, unprven (r

even unknwn) suppiers wi pse risks r supp

cntinuit, reputatins and inteectua prpert.

Additina cmpexit wi cme abut because

the vatiit cmmdit prices, currencies

and interest rates.

T imprve cst manaement acrss the cr-

pratin, supps infuencer even cntr

wi extend even deeper int nntraditina areas

(aciities manaement, ea, advertisin and

cntract manuacturin, r exampe). This new

reach wi urther cnsidate and everae cr-

pratewide vumes, ndin new pprtunities

and drivin bier benets. Pressure wi inten-

si bth t acceerate and t deepen cst savins,

especia in pst-merer interatins. Supp

wi pursue utsurcin and shrin ppr-

tunities acrss the business. Maximizin the

vaue expenditures wi hep t rce reater

standardizatin, tihten manaement speci-

catins and demand, and increase the cus n

tta ie-cce cst.

Critical Success Factors or the Future

Hw shud supp manaement ranizatins

respnd t these new rces, business mdes and

expectatins? Thruh ur extensive, in-depth

discussins with supp executives and anasis

surve data n mre than 100 uture supp

manaement strateies, we cncuded that there

are seven areas critica t uture success:

Developingcategorystrategies

Developingandmanagingsuppliers

Designingandoperatingmultiplesupplynet-

wrks

Leveragingtechnologyenablers

Collaboratinginternallyandexternally

Attracting andretaining supplymanagement

taent

Managingandenablingthefuturesupplyman-

aement ranizatin

our views n the uture appraches and issues

r each w.

Developing category strategies.Cmpanies

with cater strateies wi btain the riht bend

eadin-ede innvatin, vaue and cst perr-

mance r each specic spend area. Fr instance, a

cmpan ma pt t interate prcesses with stra-

teic suppiers ke cateries t imprve tta

cst and enhance cmbined capabiities, creatin

a mutua benecia strateic reatinship. The

ma as impement interna prcesses t imprve

perrmance in seect cateries b cratin usae

picies, enrcin user cmpiance and cse

trackin suppier perrmance.


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Figure 2

Expect increased sourcing from developing markets

Source: China Source: India

Source: Eastern Europe Source: Brazil

Buyer

North America Europe

Percentofgood

sandservices

sourcedfrom

thismarket

Percentofgood

sandservices

sourcedfrom

thismarket

Percentofgoodsandservices

sourcedfromt

hismarket

Percentofgoodsandservices

sourcedfromt

hismarket

Source: A.T. Kearney, CAPS Research, Institute for Supply Management

2007 2012

2.4x

1.6x

2.4x2.7x

2.1x

2.1x

1.4x 2.2x

Buyer


Buyer


Buyer


0

5

10

15

20

25

0

5

10

15

20

25

0

5

10

15

20

25

0

5

10

15

20

25

in cmpexit and mitiatin revenue-ss risk,

a which crss unctina bundaries.

Supp ranizatins wi re n time,

accurate and accessibe data and anatic ts.

The inrmatin needs are enrmus. gba

strateies require wrdwide data, cmmn cat-

er cdes, accurate spend data b purchase

item, suppier and use catin, and inrma-

tin n suppier capabiities and perrmance.

In additin, ts t perrm tta-cst anasis,

risk-manaement scenari pannin, suppier

cmpetenc matrices and purchase item cst

mdes are ke t devepin cater strateies.

Cater strateies wi have a strn impact

n eraphic surces supp. As shwn in

ure 2 and ure 3 n pae 8, ur surve


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thruh technica advancements and ther

innvatins. Each suppiers re and its respec-

tive marketpace wi hep determine whether it

shud be apprached via a cmpetitive r c-

abrative cater strate (see sidebar: Driving

toward Value-Based Relationships). Cmpanies wi

expect their new suppiers t be cmpetitive in a

areas imprtance.

Whie supp executives nte that imprvin

wrkin reatinships with strateic suppiers wi

be ver imprtant t their cmpanies, there is a

sinicant ap between current attempts t d s

and its purprted imprtance. T ain dierentia

vaue rm suppiers, rms wi strive t achieve

preerred custmer status. Din s wi require

chanes in the wrk streams r prcesses thruh

which buers and suppiers interace in additin

t sme behavira mdicatins n the part

ke paers. Fr exampe, cmpanies ma have t

chane the wa the reward a suppiers utstand-

in perrmance, such as prvidin pprtunities

r uture business and c-investment. Rewards

miht as incude hepin suppiers devep their

wn capabiities, areein n metrics t evauate

perrmance and investment expectatins, shar-

in inrmatin, and sicitin and istenin t

the vice the suppier. Individuas wi as

have t be better trained in reatinship buidin,

and senir-eve persnne at buin cmpanies

wi need t increase the time and ert the put

int ensurin ainment with suppiers.

The cst r switchin suppiers wi increase

as reatinships evve t emphasize vaue ver

csts, and man cmpanies wi require their sup-

piers t be pen t cachin, imprvement and

capabiit devepment. Severa eadin Japanese

Figure 4

Expect net decrease in number of suppliers by 2012

Direct goods

Percent of companies expecting change in number of suppliers

Buyer


Increase

Decrease

No change

Indirect goods and services

Average13% fewersuppliers

Average23% fewersuppliers

77%51%

22% 27%

8% 15%


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autmakers have a head start in suppier devep-

ment and imprvement skis ater ears prac-

ticin these techniques.

Hwever, the uture wi nt be a abut

pprtunit n the buers side. In an increasin

number supp market sements, a rane

actrs wi drive suppiers t be mre seec-

tive abut which custmers the pt t wrk

with. We predict that cmpanies wi ace mre

aressive and pweru suppiers in sme mar-

kets. Private equit rms kin t recup their

investments wi cntr mre suppiers, aectin

supp and supp base strateies. Cnsidatin

traditina suppiers due t merers and bank-

ruptcies wi cntinue and even acceerate, which

wi ater price and avaiabiit and disrupt exist-

in reatinships. T pursue new surces reve-

nue, suppiers wi aressive mve dwnstream

and buid capabiities that riva thse the cm-

panies the have traditina sd t. Bth cus-

tmers and suppiers wi have a reater abiit t

measure and understand cst t serve, thus ead-

in t tuher price netiatins (and, n the

pus side, increased jint erts t rt ut waste

and nn-vaue-addin activities). Cmpanies wi

be chaened t baance the desire t ain inn-

vatin and ecienc via suppier cabratin

with the need t prtect their wn businesses.

Designing and operating multiple supply

networks. T supprt their u rane cmpet-

itive pririties, cmpanies wi have t estabish

and maintain mre diverse supp chains. Whie

sme wi be semented b prduct, thers wi

be distinct t particuar custmers. Fr exampe,

A decade-n run that saw the

advantae in mst supp markets

take a prnunced tit tward the

buers is cmin t a cse. It was a

cst-cused apprach that made si-

nicant cntributins t the crp-

rate bttm ine. The new chaene

wi be t identi suppiers that er

ds, services and expertise that

can cntribute t the tp ine. Frm

nw n, when evauatin the prt-

i current r ptentia suppi-

ers in advance a surcin ert,

cmpanies must cnsider the vaue-

added assets, capabiities and ben-

ets that a suppier ers abve and

bend price and specicatins.

Whie supp has traditina

reied n reative straihtrward

ike-t-ike cmparisns t make

its decisins, vaue-based reatin-

ships wi be buit n a undatin

dierentiatin rather than cm-

mnait. That is, ptentia suppi-

ers wi have t be understd in

terms thse capabiities that set

them apart. Thse that er excep-

tina capabiities wi need t be

viewed as vaue chain partners rather

than mere supp chain participants.

Takin n such reatin-

ships wi require a shit in mind-

set (and skis) awa rm tradi-

tina surcin, which seeks t

expit buin pwer, tward rea-

tinship manaement and creat-

in cmpetitive advantae. The

rmer xatin n unit price and

cst savins wi ive wa t a

vaue cus that cnsiders innva-

tin, vaue chain ptimizatin, stra-

teic cst manaement, business

cntinuit and peratina exce-

ence. Cmpetitin wi be repaced

b cabratin; demands wi

becme requests repete with ques-

tins that ster nin diaue.

The cncept vaue-based

suppier reatinships is nt new.

Sme eadin cmpanies have

n exceed at them. What is

new is the market-driven need t

embrace suppiers instead cn-

stant threatenin t repace them

as supp market cnsidatin,

scarcit ke suppies and ther

rces intensi in cmin ears.

Driving toward Value-Based Relationships


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t meet the needs custmers in devep-

in ecnmies, cmpanies wi cntract with

ca partners that can execute rder ument

and deiver. The na inks the supp chain

wi be taired t each devepin market.

T meet the demands sma-

market sements withut drivin

up csts, cmpanies wi emp

mduar desins, pstpnement,

utsurcin, aternative transpr-

tatin mdes and warehuses,

and creative partnerin.

Scarce surces supp wi

ead t sme cmpex supp

chains, as ne eadin U.S.-

based ranic d manuac-

turer earned. With demand r

its prducts ever increasin, the

cmpan nw imprts Chinese

strawberries, Turkish appe pure

and Canadian bueberries t prduce its ppuar

ranic urts because dmestic surces are in

such shrt supp.

We predict that business is n the vere an

era massive supp chain redesin and restructur-

in. The past tw decades have witnessed a pri-

eratin supp chain desins, and man supp

ranizatins wi questin their wn. Supp

chain assets and unctins, such as aciities, inven-

tries, services and transprtatin, wi be repsi-

tined in respnse t business dnamics. Aiit

wi be vaued thruhut the supp chain, bth

t aw r rapid respnse t chanin business

cnditins and t manae disruptin. In sme

cases, vertica interatin mdes wi be emped

in seect eraphies r supp securit reasns.

Tta-cst appraches wi streamine supp

chain peratins. Reducin xed assets wi bth

shrink csts and increase fexibiit as n-demand

service cmes t be a preerred mde. Cst driv-

ers wi be tracked and manaed acrss a tradin

partners, whie cst manaement ver prduct

ie cces wi be mdeed and cntred. Majr

techn investments wi be made t reduce

inventr and distributin csts and hep speed

prducts t markets. With s much ridin n

supp chain exceence, ean practices and Six

Sima wi becme standard peratin prcedures

in supp chain activities.

Bth ba turbuence and the risk intr-

duced b cntemprar supp practices wi

mandate that risk be viewed as an verarchin

cncern in supp netwrk desin and manae-

ment. gba supp bases and markets, extended

supp ines, ean practices, increased cmpex-

it and tihter cupin wi increase supp

chain risk. Cmpanies wi invest in sphisticated

mdes t hep detect inherent risks, identi data

needs, incrprate individua assessments, assess

csts and benets, and suest risk-preventin

and mitiatin strateies. In respnse, supp

manaement wi be required t devep and

impement sphisticated risk-manaement strat-

eies that incude cabrative risk sharin an

the supp chain.

Smaer machines and better pro-

cesses allow Toyota to reduce

the cost buidin a new pant

b near 30 percent.


14/20


Leveraging technology enablers. In recent

ears, techn prviders have steadi created

ts t enhance the prcesses r spend manae-

ment, surcin, cntractin, prcurement and

suppier manaement. A decade a, supp man-

aement ranizatins measured their activities

n the spend cverae the were abe t achieve

with interna stakehders. In the uture, measure-

ments wi be made aainst cmpetitive and cab-

rative indicesr exampe, the requenc with

which the app cmpetitive and cabrative

techniques t spend cateries. leadin supp

ranizatins wi cntinue t expit techn

eective and benet rm mre and better tech-

n enabers in the uture. Cmpanies wi use

these enabers t resve issues arund data shar-

in, cndentiait, ea securit and misuse b

suppiers r custmers, and wi master the tech-

nica interatin externa and interna sstems.

Expressive biddin and scenari-based pti-

mizatin unctins wi be wide used r surc-

in. Increasin, end users wi perrm rutine

purchasin activities thruh eectrnic catas

that wi ive the same k, ee and ease use

tdas cnsumer-cused e-cmmerce sites.

Techn wi mnitr cmpiance t the terms

master areements and enrce demand man-

aement. Best practices in purchasin wi be

embedded thruhut the ranizatin via st-

ware-enabed prcesses.

Whie techn has traditina cused

n the interna inrmatin cntained within pr-

tected enterprise resurce pannin sstems, web-

based ts wi enabe cmpanies t capture and

share peratina inrmatin acrss the supp

chain t ive a partners visibiit int the bi pic-

ture. Aut-identicatin and remte-mnitrin

technies such as radi requenc identica-

tin (RFID) wi make it easier t track activities,

catins and cnditins. New ts wi emere

r mnitrin and manain supp chain risk

acrss mutipe tiers in the supp chain as risk

becmes better dened and cdied.

As the abiit t wrk with techn ts

bend the crprate rewa increases, cab-

ratin patrms wi better ink interna depart-

ments and externa partners r new prduct

devepment, desin chanes, and peratin pan

and schedue chanes. Sstems wi prvide inte-

rated data manaement (r exampe, prduct

data manaement, cmputer-assisted desin, and

requests r inrmatin, requests r prpsas

and requests r qutes) with three-dimensina

denitin, dcument manaement and cab-

ratin capabiities.

Tmrrws techn wi brin a hst

benets. Individuas wi netwrk cabrative

t cnnect with the riht pepe and accmpish

wrk reardess their ranizatina aiatin.

Individua users wi custmize dashbards and

anatics t dene hw the want t access data,

wrk with it and measure resuts. Knwede man-

aement wi as imprve reat, awin indi-

viduas t remember and share what the aread

knw and readi access what thers knw.

o curse, nne these ts wi pa

withut master ke aspects ike techn-

seectin, impementatin, maintenance and

trainin. Cnsider, r exampe, the debace that

ensued when a eadin aviatin cmpan dis-

cvered t ate that tw its aciities in di-

erent cuntries were usin incmpatibe desin

stware. The prbem was nt discvered unti

the wirin manuactured in ne aciit did nt

t prper int a pane that was n an assem-

b ine in anther, resutin in a substantia dea

in the rut a majr new desin. As this

exampe shws, the abiit t manae techn

eectiverather than techns abiit t

deiverwi becme the chaene.


15/20


Collaborating internally and externally.

Whie cmpanies have made tremendus strides

ver the past decade b strenthenin their supp

manaement capabiities and takin n aressive

surcin imprvement prrams, achievin majr

ains rm supp manaement in the uture wi

require a much hiher eve interna and exter-

na cabratin. Each tpe cabratin wi

brin new chaenes r the supp manaement

team an with the ptentia r

substantia rewards.

Interna, supp manae-

ment wi devep r deepen rea-

tinships with ther unctins.

Whie much the cus arund

surcin ver the past decade has

been n direct spend, indirect areas

such as inrmatin techn,

ea, and marketin and adver-

tisin wi cme t be addressed

as cmpanies crdinate sup-

ps prcess knwede with the

subject matter expertise the

crprate unctins.

Vaue creatin wi advance

int areas that re n exter-

na cabratins. Wrkin with suppiers n

initiatives such as drivin csts ut a cm-

mdit r ndin was t repurpse existin

technies n scratch the surace what

wi be expected. Cmpanies wi devep net-

wrks suppiers required t wrk we with

ne anther and with the cmpan. Emphasis

wi shit tward mutiatera actins t imprve

hw a cmpans end prducts are desined,

prduced and deivered.

T ensure a stead stream innvatin, cm-

panies wi need t imprve their interated prd-

uct and service devepment prcesses. Supp

manaement wi pa a make-r-break re b

vercmin interna and externa behavira bar-

riers and hepin t interate suppiers int the

prcess. Findin the riht suppiers wi prve t

be just the start. other kes wi incude strenth-

enin reatinships with the cmpans wn

research and devepment, enineerin and mar-

ketin ranizatins, appin techn t sup-

prt the prcess interatin, and ensurin mutua

prtectin ne anthers inteectua prpert.

Jint-devepment erts with suppiers wi

brin a pweru pa and ead t cmpetitive

advantae. Tta exces at this practice. one

wa it has dne s is t wrk with its suppiers

manuacturin equipment t devep smaer,

ihter machines and t secure excusive use

these new technies. The cmpan is thus

abe t buid smaer pants and shrter assemb

ines that can be readi recnured as prduc-

tin needs chane. The widespread empment

smaer machines and imprved prcesses has

awed Tta t reduce the cst buidin a

new pant b near 30 percent, hepin the aut-

maker becme the ba saes vume eader.

The cost-ocused hammer per-

sonalities wh have driven supp

success wi need t becme morelike Swiss army knives, readi

adaptin t dierent purpses.


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Attracting and retaining supply talent. In

the next 10 ears, the supp manaement ra-

nizatin wi take n increased respnsibiit and

a hiher-vaue re. Success wi hine n whether

the supp ranizatin can attract and retain

individuas with the riht skis and capabiities t

meet uture requirements.

Thse wrkin in supp wi need deep

supp market knwede cuped with extensive

prcess knwede. At the same time, supp pr-

essinas wi require brad-based business knw-

ede and mutidiscipinar experience. Frein

anuae skis and internatina experience wi

as prve imprtant, as wi eadership, innva-

tin and cabratin abiities. The cst-cused

hammer persnaities wh have driven supp

success ver the past decade wi need t becme

mre ike Swiss arm knives that can readi adapt

t dierent purpses.

Cmpanies wi need a mutiprned strate

t acquire, devep and retain individuas with

these skis and cmpetencies. Thus, the skis

sectin the rsum and the traits pepe

demnstrate durin the recruitin prcess wi be

at east as imprtant as the candidates previus

prcurement experience. Recruitin externa

r industr and supp manaement expertise,

addin industr and dmain experts rm ther

departments, recruitin n campus, trainin sta

n an nin basis and prvidin individua

career path devepment wi a prve t be just

part the mix. The prverbia war r taent

wi be uht ver thse wh pssess a the

necessar traits and taents.

Cmpetenc maps wi dene bth current

and uture needs and hep cmpanies master

taent evauatin b servin as the basis r ri-

rus skis assessment and testin current

sta and ptentia interna transers r new hires.

Taent successin pannin wi increase in impr-

tance as supp ranizatins se knwede

and experience t retirement and ther cmpa-

nies. Fiure 5 presents an verview hw supp

manaement persnne wi be evauated.

Factrs such as baizatin, demraphic

shits and reater crss-ranizatina cabra-

tin wi create a mre diverse, distributed wrk-

in envirnment. leaders wi be chaened t

manae and mtivate individuas and teams acrss

unctins, eraphies, cutures and eneratins.

With s man business skis needed r

success, the re supp chie wi ead sme

executives t ther career paths and be part the

jurne rather than the na destinatin. Rick

Waners path t CEo gM incuded a stint

as head the autmakers prcurement rani-

zatin. Frmer Chrser CEo Thmas Stakamp

headed the cmpans supp manaement ra-

nizatin and athered the eendar SCoRE pr-

ram n his wa t the tp. Wiie Deese at Merck

mved rm senir vice president ba pr-

curement t president Merck Manuacturin

Divisin in ess than tw ears.

We predict that cmpanies wi app princi-

pes earned rm strateic surcin and strateic

suppier manaement t taent acquisitin. As a

shrtae supp and ther taent wrdwide

becmes evident, cmpanies wi estabish strn

reatinships with eadin ca universities and

prvide sinicant undin t bth acut and

the institutin t ain access t students, whie

taretin students at eadin schs wrdwide.

Managing and enabling the uture supply

organization.Whie the center-ed supp ra-

nizatin wi cntinue t dminate in the cmin

decade, chanin cnditins wi brin shits t

ranizatina structures and crprate reatin-

ships. Increasin, ranizatins must baance the

advantaes that centraized crdinatin ers with

the need r ca respnsiveness. Sme wi rant


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supp manaement authrit and eadership t

ca business units t buid eadership and devep

the taent needed in shre catins. others wi

shit authrit and respnsibiit back t the stra-

teic business units i the pressures n cmmdit

prices essen. Best practices and prcesses wi be

embedded in techn, thus essenin the need

r center-ed r -cated practice experts.

We predict that mre manuacturers wi

chse t base their supp activities and persnne

in devepin cuntries, pacin their supp head-

quarters, pepe and respnsibiities in catins

near majr manuacturin centers and devepin

markets.

Interatin current supp-reated unc-

tins is expected t increase. At sme cmpanies,

supp manaement wi becme part a supp

chain ranizatin that incudes peratins, dis-

tributin and ther unctins. In ther crpra-

tins, the prcurement chie wi unctin as mre

a chie peratins cer, manain bth inter-

na and externa supp units. In man instances,

supp wi becme the ca pint cst man-

aement thruhut the entire cmpan.

Cmpanies wi devep measures that direct

ink supp manaement perrmance t cmpan

and business unit strateies. Additina, tta-

cst mdes and predictive metrics wi hep uide

strateic surcin and supp chain decisins.

Onward and Upward

As indicated b ur stud, man the next bi

thin strateies and practices that have been dis-

cussed in recent supp manaement pubicatins

and studies are nw enterin int prminence

and wi remain ke t success in cmin ears.

Tw quaities that supp has n emphasized

executin and reatinship manaementwi

Figure 5

Tomorrows talent profile


Softer skills

Cross-cultural attributes

Cross-functional expertise

Current and future needs

Multidisciplinaryexperience

Broad businessknowledge

Collaborativestyle

Innovativespirit

Leadership ability

Internationalexperience

Foreign languageskills

Supply market knowledge Supply process expertise


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becme mre imprtant as it becmes necessar

t hande certain strateic suppiers as careu as

a cmpans ke accunts.

Whie the pace da-t-da chane miht

seem sw, a k back reveas hw swit

thins rea are chanin. less than a enera-

tin a, the prcurement unctins eader was

tpica a directr wh reprted t a vice pres-

ident wh reprted t a member the execu-

tive team. Tda, supp manaement has a seat

in the executive suite and sees its respnsibiit

and accuntabiit cnstant increasin. Factrs

such as baizatin, market dnamics, custmer

demands and vernment reuatins cntinue

t add cmpexit t supp chains, whie the

imprtance buidin reatinships with vaue-

added supp partners and interna cab-

ratrs cntinues t increase. Techn wi

urther transrm supp manaement strateies

and prcesses, whie the supp ranizatin wi

evve t t business mdes and strateic needs.

Fina, with a eneratin n the vere retire-

ment, and a new set skis required t succeed,

ba taent manaement pses a rwin cha-

ene that wi be addressed in was that pa t

supps estabished strenths.

onward and upward t meet the chaenes.

Its a wa ie in supp.


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key supply strategies for tomorrow ak kearney

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