The Great Divide: What’s Behind the Gap between Supply Chain Leaders and Laggards?

Just as supply chain is gaining stature within enterprises, many organizations are confronting critical talent shortfalls

Kelly Marchese
Kelly Marchese

Each year, Deloitte surveys supply chain leaders to understand their top-of-mind issues and the actions they are taking to address them. For the 2015 Supply Chain Survey[i], a particular focus was put on issues of talent. The decision to focus on talent came from Deloitte’s daily interactions with clients who depend upon the excellence of their supply chains. These clients repeatedly voiced growing concern over the perceived growing talent void in the supply chain profession. The 2015 survey, in fact, confirmed this hypothesis with formal results finding few executives expressing high levels of confidence in the talent in their field—and in their organizations. A startling statistic emerged—only 38 percent of executives surveyed say they are extremely or very confident that their supply chain organization has the competencies it needs today.  

What was possibly more concerning was the vast difference in the answers from the survey’s primary respondent groups: supply chain leaders and supply chain followers. To identify supply chain leaders, Deloitte polled a population of senior executives. These executives were asked how the performance of their company’s supply chain compares to that of other companies in its industry on two specific metrics: inventory turnover, and the percentage of deliveries that are on time and in full. If the executive felt that his or her organization’s performance was significantly above average for both metrics, the organization was designated a supply chain leader (8 percent of total survey respondents). Conversely, if he or she felt that performance was less than significantly above average, the organization was designated a supply chain follower (92 percent of total survey respondents).

Supply chain leaders look different than followers from various angles. To begin with, their financial performance tends to be high quality. Leaders are much more likely than supply chain followers to have better financial performance compared to other firms in their industry. They also appear to be more innovative, tending to employ a wider range of capabilities. Thirteen technical capabilities were listed in the survey and ranged from optimization tools to 3D printing. Every one of these technical capabilities was more likely to be employed by supply chain leaders than by supply chain followers and, in many cases, by a wide margin. To use 3D printing as a specific example, Deloitte previously found, in a 2014 survey[ii], that adoption of 3D printing technologies was reported by 24 percent of respondents from manufacturing companies. By contrast, 50 percent of supply chain leaders surveyed in 2015 adopted 3D printing technologies.

While there were many differences in the answers from supply chain leaders and supply chain followers, the largest and most startling difference was found around how they specifically view supply chain capabilities and talent (with the latter being something of a concession to reality). By a margin of 25 percent, leaders surveyed are more likely to believe their supply chain organizations will make increased use of external expertise and staffing (67 percent of leader respondents vs. 42 percent of follower respondents). This external staffing will come from organizations in which supply chain is prioritized as a leading function vs. a support function. Organizations in which supply chain simply resides as a support function are perceived as not developing the sustainable supply chain leadership candidates. Those organizations in which supply chain is viewed as vital to the business do better with developing their talent. This suggests that supply chain talent may flourish more effectively when it lives outside the walls of organizations in which it can only be a support function and lives inside organizations in which supply chain excellence is the business of the business.

The 2015 Supply Chain Survey revealed that supply chain management finds itself in something of a crisis. Just as it is gaining stature within enterprises, many organizations are confronting critical shortfalls of talent. However, the actual responses from respondents grouped as supply chain leaders and followers reveal an opportunity. Talent is a success factor that could separate the winners from losers and organizations that recognize this have potential to come out on top. Supply chain leaders are clearly recognizing the problem and actively mitigating it in their organizations through adapting innovative technical capabilities. Supply chain followers remain somewhat unaware or unable to tackle the talent issue, and are maintaining stagnant recruiting and talent development processes. One would think that the gap between these two groups will likely continue to increase as their organizations perform at significantly different levels.

Kelly Marchese is a principal at Deloitte Consulting LLP.

[i] Survey methodology
Deloitte commissioned Bayer Consulting, a market research company, to conduct the online survey of 400 executives from U.S. companies in November 2014. Participating companies were required to have global operations, with one or more of the following entities located outside the U.S.: customers, operations or third-party service providers. This is the third consecutive year Deloitte conducted the survey.

[ii] “3D printing and the new shape of industrial manufacturing,” The Manufacturing Institute, June 2014.

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