Supply chain’s better world
From the October 2019 print edition
Supply chain professionals from around the world gathered in Las Vegas from September 16 to 18 for the Association For Supply Chain Management (ASCM) 2019 Conference. The event, which hosted about 2,000 attendees, featured seminars, speakers and keynotes along with networking opportunities.
During the conference, Supply Professional magazine spoke with Abe Eshkenazi, ASCM’s CEO, to discuss the organization’s focus, the supply chain field’s direction and more.
The ASCM, formerly known as APICS, has 60 years of history and has transitioned over the years, Eshkenazi said. Previously, its focus has been purely on the supply chain professional. But that has changed as companies now view their supply chains as an integrated activity rather than several disparate parts. It’s now companies that promote workforce development, rather than just individuals.
“It has really challenged us to ask the question, ‘who do we represent and what is the outcome of our efforts as an organization? What our value proposition to the companies?’” he said.
To represent professionals and their companies from an end-to-end supply chain perspective, APICS began several mergers and consolidations with other associations starting in 2010 and 2011. But since launching ASCM last year, the organization has realized it’s actually at the beginning of its journey, rather than the end. It must now focus on the impact that supply chains have on people, economies and patients.
“We truly believe that we can make a difference in the world through supply chain, that we can have a better world through supply chain,” Eshkenazi said. “Our focus right now is to use supply chain to drive positive results for consumers and patients across the globe.”
The supply chain field has changed during that time, Eshkenazi said. Previously, technical competency and subject matter expertise were enough. Now, he says, that’s the price of entry. Other skills, such as advanced management skills, collaboration ability and developing cross-functional relationships are the keys to advancement.
Academia, businesses and industry associations must now work together to address issues such as the skills shortage, which Eshkenazi said involved not only the competencies that supply chain professionals need but the number of those in the field. As well, the fact that supply chain has multiple entry points into the field with no one career path to leadership is both a benefit and a challenge.
“This is a rewarding career, but the awareness is just not where it needs to be in terms of job opportunities, leadership opportunities and making a difference in an organization,” he says. “I think we have a significant challenge.”
The ASCM has also partnered with Supply Chain Canada, Eshkenazi said. Such partnerships give an opportunity to leverage the resources that organizations like Supply Chain Canada have, which can benefit both sides. It also affords the chance to co-develop, and perhaps even co-sponsor, events or research studies, he noted.
There are also several trends currently challenging supply chains, Eshkenazi noted. These include sustainability, which goes beyond just the environment to cover other factors like geopolitical unrest that threaten organizations’ ability to continue their supply chains. It’s difficult to prepare for circumstances when there’s little clarity into what the impact of those circumstances will be.
“Organizations are taking the necessary steps to mitigate their risk of disruption to their operations, through a variety of different strategies—whether technology or through disparate manufacturing or sourcing, we’re seeing a greater response to that,” he said.
Talent development and the skills shortage is another challenge, with ASCM anticipating a gap in supply chain of about two million people by 2025. While there are more graduates, their competency and capabilities aren’t consistent with what employers are looking for. They must therefore spend time and effort training new employees in fundamentals they should have learned during their education.
Still, ASCM is excited about supply chain’s role in making a difference in the world, Eshkenazi said. “We’ve found our true north as an organization, and that’s connecting the supply chain professionals as well as the companies to the impact that they’re having on people, on patients, on economies across the globe,” he said. “We can grow the organization and we can make a difference in the world.
The conference featured several education seminars, including one focused on supply chain risk and resiliency, presented by Gregory L. Schlegel, founder of the Supply Chain Risk Consortium and executive-in-residence at Lehigh University in Pennsylvania.
Schlegel began his session with a definition of supply chain risk and resiliency, which he noted is “the implementation of strategies to manage every day and exceptional risks along the supply chain through continuous risk assessment with the objective of reducing vulnerability and ensuring continuity.”
He also encouraged the seminar’s several hundred attendees to think of supply chain risk management as the intersection between supply chain management and risk management.
Schlegel discussed a 21st-Century supply chain risk maturity model, a four-stage approach with visibility as the first stage. The second stage is predictability, which involves digitizing the supply chain in order to do planning and what-if scenarios. The third stage is resiliency and the fourth is sustainability. Each step in this process is about two-and-a-half to three years, although they may take longer depending on the organization. “Throughout this journey, you have to constantly think about identifying, assessing, mitigating and managing risk,” Schlegel said.
As supply chain maturity grows, the risk decreases although never disappears, Schlegel said. The supply chain risk management landscape is large, and organizations must know where they are. He also shared Allianz’s top-10 risks for 2019, which includes cyberattacks, geopolitical unrest, market volatility and, at number one, business interruptions. “That’s us, folks,” he told the audience about the number-one spot. “Good, bad or indifferent, we’re at the top of the food chain when it comes to chief risk officers’ concerns.”
Schlegel defined risk appetite as what level of risk a company is comfortable experiencing or embracing. Risk appetite is tied to company culture, so it’s important to understand that culture relative to how much change it can handle and how it embraces change.
Schlegel also noted five cognitive biases related to risk from a McKinsey & Company report, which include: action-oriented bias, prompting people to take action with less thought; interest bias, arising from incentives within the organization that tend to be conflicting and misaligned; pattern-recognition biases, causing people to see non-existent patterns in data; and confirmation bias, meaning to see patterns that support existing beliefs. As well, stability bias is a tendency towards inertia in uncertain environments; and social bias comes from our preferences for harmony over conflict.
Risk is also a matter of perspective, Schlegel said, highlighting four perspective archtypes commonly used to look at risk: maximizers (who don’t consider risk to be as important as profits); conservators (who view increasing profit as not as important as avoiding a loss); managers (who are careful to balance risks and rewards); and pragmatists (who avoid commitments and keep options open).
There are also four strategies that tend to align with the four perspectives: loss controlling, favoured by conservators, which looks to identify and mitigate the firm’s most significant risks; risk accepting, which is favoured by the maximizers; risk steering, favoured by academics and consultants in which decisions go through rigorous analysis; and diversifying, meaning exposure is spread among various risk classes to avoid concentration in the same class (favoured by pragmatists).
Looking at these factors helps to increase awareness of risk appetite, Schlegel said. He quoted management consultant and author Peter Drucker, who said that “culture easts strategy for breakfast.” Risk is all about culture and tends to be a very emotional arena, he added. “We’re trying to give you some firepower and ammunition if you’re going to move into that arena,” Schlegel said.
Schlegel also focused on resiliency, noting that a resilient enterprise can overcome disruptions and transform itself to meet changing needs and expectations of customers, shareholders and stakeholders.
Schlegel also discussed a PWC study from 2016 discussing resiliency and agility, which covered almost every major industry sector. The company asked questions about where respondents fell on agility and resiliency maturity curves. Agility is proactive and better prepared for supply chain risks, while resiliency is reactive and more responsive to those risks.
The ASCM 2020 Conference takes place in New Orleans, September 13-15. For more information, visit https://bit.ly/2Boaenk.