Integrating Modern Technologies and Human Resources -– the biggest challenge for Supply Chain Companies

Vijay Sardana

In modern trade regime, strong interdependencies between supply chain management and logistics management is witnessed. It is thus difficult to identify precise boundaries. In other words there is a tendency to oversimplify the supply chain issues or make it too complicated by adding too many issues, which are not required for efficient business operations.

In modern supply chain, these boundaries are continuously moving to accommodate an integration of supply chain and logistics activities depending upon the changing consumer expectations.  In fact, it is suggested that logistics is a sub function of the supply chain. While logistics may be involved to some extent in an increasing number of supply chain activities but it can never be a part of the complete supply chain spectrum.

Functions such as sourcing, manufacturing, customer service and retailing involve logistics in their planning and scheduling for optimizing the end-to-end supply chain, but their core operations are somewhat different.

The Council of Supply Chain Management Professionals says that Supply Chain Management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all Logistics Management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers.

Supply Chain Management in order to be more effective integrates supply and demand management within and across companies. It is thus integrating function with primary responsibility for linking major business functions and business processes within and across companies into a cohesive and high performing business model. It includes all of the Logistics Management activities as well as manufacturing operations, and it drives coordination of processes and activities with and across marketing, sales, product design, and finance & information technology.

An increasingly important component to the supply chain sector is the emergence of functional and process outsourcing, thus creating the need for businesses (third party logistics providers, i.e. 3PLs) that are specialized in providing logistics services. As a result, the sector comprises two main groups - logistics/supply chain users and logistics/supply chain service providers.

It is observed that the most common supply chain activities completed in-house focus on inventory management and customer service, including processing and executing orders. Conversely, the most common outsourced activities focus on transportation of goods (i.e., outbound and inbound transportation, and freight forwarding), customs (i.e., brokerage and clearance) and, to a lesser degree, warehousing. In modern world many new functions and dimensions can be added to the outsourcing basket.

According to the market estimates, the growth rate for this market is about 20%, with the annual growth rate for warehousing, transportation management, air/ocean freight forwarding, and dedicated carriage (four core logistics sections) being 15% to 25%.

From a geographic perspective, the supply chain-oriented organizations typically operate in multiple regions across the country and internationally. Only a few operate in one region alone. Most of the regional players have their specific territories to operate and they offer more than just logistics support.

Internationally, the modern supply chain evolved in U.S., followed by Europe and Asia Pacific. In most companies the supply chain function is generally centralized and headed by a senior manager.

Not only has the supply chain function evolved from strictly storage and transportation to an active integration with many other supply chain activities, but it is also shifting in terms of perception from being a common cost centre to playing a strategic competitive role. The nature of work in the sector is changing as the supply chain becomes more complicated and strategic, and organizations try to manage the full supply chain, rather than its individual parts.

Trends in Human Resource Management in Supply Chain:

In an increasingly international market, global security, international trade, international competition and border-crossing requirements are all affecting the supply chain sector, and are expected to continue to do so over the next five to ten years. The Strategic Human Resources Study of the Supply Chain Sector impacting supply chain operations include increasing complexity, financial/cost pressures, and increasing speed and quality expectations.

Customers and competitors are exerting enormous pressure on supply chain logistics. More specifically, the link between supplier effectiveness, supply chain performance, and customer service has become critical. Having improved manufacturing efficiency and product quality in the past, suppliers now need to improve their collaboration with retailers and customers in order to respect almost instantaneous delivery requirements. Increasing customer expectations/demands, in terms of speed and quality, place an increased focus on customer service.

Technology is clearly an important tool in a company's efforts to respond to ever-increasing customers' expectations. Small and medium-sized organizations cannot often afford the latest technologies required to remain competitive in their respective markets. This is also one of the reasons for growing acquisition and mergers in this sector. Consequently, there has been a widespread increase in the number of third-party service providers, as well as their reliance on contemporary information system services.

Technology and the resulting information management requirements are identified as key business drivers currently impacting the supply chain function.

Technology adoption will be the key driver

Information management systems and related technology have evolved at a more rapid pace and have had a more profound impact on job design and skill requirements than process and production technology. Unfortunately, most of the organizations are not prepared for the level of technological integration that is required to compete successfully. The biggest challenge in technology adoption is mindset of managers and their attitude towards acting like power centers within the organisation.  Many managers are not willing to delegate their decision-making powers to system-oriented approach.

In general, most of the organizations lag in both investing in and implementing new technologies. While information management/ technology is one of the most common activities reported as falling under the responsibility of the supply chain function, technology appears to be under-utilized. The degree of technology use reported by many organisation is very often exaggerated. As a result the use of ERPs is limited and stand-alone systems for specific functions are common.

Technology is most commonly employed for inventory and warehousing management. Looking forward, employers are considering employing technology for transportation, and customer and supplier relationship management. Not surprisingly, larger organizations have implemented more supply chain-related information systems than smaller ones.

Interestingly, despite the number of organizations that indicate that technology is applied in their organization, few indicate that they currently have the requisite skills to fully employ technology.

Organizations want to continually update their technology to improve efficiency, but their ability to keep pace with technological change is a challenge. The introduction of technology is changing the nature of work for all occupational categories (i.e., managerial, operational and tactical), in terms of increased pace of work with less lead time; and more real-time information and increased requirement to manage this influx of information.

As a result of technological change, software application and analytical and decision-making skills are rapidly replacing traditional manual processes and abilities. It appears that many employees have been able to adapt to this evolution.

There are divergent views with respect to whether employees possess technically adaptable skills. Employers often say that their employees do not have the requisite technical skills; employees on the other hand indicate that they are provided with adequate training to make full use of technology; and academic institutions indicate teaching in the areas where employers employ technology. Employers are dealing with their skill gaps in the short term by focusing on in-house and on-the-job training. In the longer term, this has implications for more pro-active technical skill development and opportunity for industry/ academic institution alliances.

As a result of technology introduction, going forward it is anticipated that there will be further emphasis on the importance of instantaneous adaptation to customer requirements, information management and general management skills.

Missing link is Effective Trainers:

Based on our interaction with many supply chain managers and study of their supply chain systems and people involved in the system, it is clear that the training components are either ill conceived or improperly executed. One of the reasons given is that most of their trainers have no experience of operating issues in supply chain management and how to make technology adoption user friendly. Most of the trainers either discuss concepts or features of technology but very rarely understand the human side of business of supply chain, practical issues and their integration with technology. In author's view, effective training is vital for smoother adoption of technology under given constraints.

 

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