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Insights from a European Survey on the 1

profile and role of the Supply Chain Manager


Ann Vereecke, Robert Boute, Roland Van Dierdonck and
Steven Serneels

Supply Chain Managers


Who needs them?
Over 800 supply chain
managers in a variety of
industries in Western Europe
have participated in this
survey-based research project.
We have investigated their
position in the organisation,
their educational background,
their prior experience, the
scope of their function...
3
4
executive+summary

Supply chain managers: Who needs them? The complexity of the supply chain plays a
This has been the central question of our role in determining the scope of the supply
research study. Many companies have chain function and the level of the supply
introduced the supply chain function over the chain manager in the organization. Another
past couple of years. We encounter several of determining factor is the strategic position
these supply chain managers in our day-to- that is given to the supply chain. A supply
day activities, and have always been intrigued chain that is key to competitive advantage
by the differences in their job content, in the asks for a senior supply chain manager with
range of responsibilities they have, and in the an overall responsibility, who supervises
position they occupy in the hierarchy. Clearly, sourcing, manufacturing, distribution and
it looks like not all companies need a supply planning. However, in truly global supply
chain manager who is in charge of all aspects chains, the complexity of the chain makes
of logistics. Some do, but some dont. It has it too difficult to combine all functions into
been the objective of our research to get a a single responsibility. Here, we tend to
good understanding of these differences, find supply chain managers that are more
and to identify what drives the need for a functionally oriented.
full scope supply chain manager.
Supply chain management is an ever
Over eight hundred supply chain managers more demanding job. Functional expertise
in a variety of industries in Western Europe remains a key requirement: logistic
have participated in this survey-based expertise, knowledge of planning systems,
research project. We have investigated their technical skills are crucial. But even more
position in the organization, their educational important are the soft skills: leadership,
background, their prior experience, the scope communication, people management
of their function. are all rated very high. Knowledge of the
business context environmental issues,
We found the inspiration for this research
international business, law and regulations
project in a study that was carried out a few
are expected to become more important in
decades ago. Materials Managers: Who
the future. The supply chain manager for the
needs them? was the research question at
future needs a well balanced competence
that time. The conclusion was that different
profile, with a good blend of soft skills
companies need different structures, ranging
and in-depth functional expertise, and
from fully integrated to functionally oriented
with a clear understanding of the business
specialist structures. (Miller et al., 1979 and
context. Developing this set of skills and
1981).
competencies takes time and requires a
Todays supply chain managers differ from willingness to invest in education and training.
the materials managers of the past in that
they ideally are managing the extended
supply chain, which includes the customers
and suppliers. The process they manage
reaches far beyond the process managed by
the materials managers in the past. However,
the overall conclusion hasnt changed. There
is no one size fits all approach to the supply
chain organization. Different companies, or
rather different industries, need a different
approach to supply chain management.
History is repeating itself
introduction+ 5

Why this research?

It is only about 10 years ago that people competitors spread all over the globe, the
started to talk about Supply Chain supply chain manager is often managing
Management as a management discipline. complex logistic networks across borders
Even today, the definition of supply chain and cultures.
management is still a subject of discussion.
A lot of attention has been devoted to
It has evolved substantially over the past
concepts, techniques and computer-based
years. Previously, logistics was a functional
systems that help organisations to better
domain in the company, and the logistics
integrate their supply chain activities.
manager was responsible for everything
However, much less attention has been
concerning storage, transportation, inventory
given to the more soft side of the supply
management; sometimes the logistics
chain system: its organisational structure.
function also included purchasing and
By this we mean the way the various supply
customer services. In the early nineties,
chain tasks are being allocated to individuals
the term integrated logistics was coined,
and organisational units and the way the
indicating that it was not sufficient to optimize
actions and decisions of these individuals
transportation, purchasing and logistics
or units are integrated. Little is found in the
individually; rather they should be optimized
literature on how to organize for supply chain
together to obtain an integrated solution.
management. Nevertheless, practitioners
This was the basis for what supply chain
have many unanswered questions with
management stands for today.
respect to the supply chain organization.
By thinking in terms of processes, supply Should manufacturing report to the supply
chain management closes the gap between chain manager? Should customer service
the different functional domains. What has report to the supply chain manager? Where
changed is that the scope is not limited should the supply chain manager be on the
anymore to the traditional logistics activities. organization chart? To whom should he or
It often includes manufacturing and requires she report? In our research study, we tried to
integration with other functions such as answer some of these questions.
product development, finance, marketing
We found the inspiration for this research
and sales. Equally important is the fact that
project in a study that was carried out a few
the scope extends beyond the corporate
decades ago. A team composed of Roland
boundaries of an organisation to include
Van Dierdonck, Jeffrey Miller and Peter
different legally independent organisational
Gilmour, studied the role of the materials
units for which some of the classical
manager and his position in the organization
integration mechanisms are less effective or
in manufacturing companies. Materials
even irrelevant.
management was at that time a new function,
Few managers will deny the value of supply bridging purchasing, manufacturing and
chain management. In this globalised world, distribution. Materials Managers: Who
effective supply chain management is one needs them? was the research question.
of the best ways to secure competitive The conclusion, which was published in a set
advantage. It often allows making dramatic of articles about thirty years ago, was that
improvements in cost, productivity and different companies need different structures,
customer service. Many companies have ranging from fully integrated structures, to
found that, especially in very competitive functionally oriented specialist structures.
product markets, improving supply chain (Miller et al., 1979 and 1981)
management offers the best potential for
increasing profitability. It is also a complex
function. With suppliers, customers and
6 Introduction
Why this research (cont)

The purpose of this study, almost thirty years Secondly, we wanted to understand how the
later, is two-fold. Our first goal has been to supply chain department is organized: How
describe the typical supply chain manager in are tasks allocated and supervised? Which
terms of education, skill set, profile and career mechanisms are used to integrate these
track. This may help us to understand the tasks? Do we rely on hierarchical structures or
key competencies and skills the supply chain on trust? Our study clearly shows that supply
professional needs today and in the future. chain management has different meanings in
different companies. In the final section of the
report we will elaborate on the reasons for the
differences in supply chain organizations.
The Goodman Chair 7

in Logistics Management+

This research project is set up within the Under the Chair agreement, Vlerick Leuven
Goodman Chair in Logistics Management. Gent Management School further develops
the logistics management knowledge base.
Goodman is an integrated global property
The Goodman Chair enables a Vlerick
group that owns, manages and develops
research team to undertake research in the
industrial property and business space across
logistics management sector and to develop
Europe, Australia and Asia. The Group invests
a knowledge base which ultimately grows into
in business parks and logistics property such
something that the industry can take forward.
as warehouses and distribution centres. It
offers purpose-built property solutions to The Chair allows Goodman to get
meet the needs of its customers as their independent and academic insight into the
requirements change locally and globally. relatively young discipline of supply chain
management and to match it with its day to
Goodman encourages innovative thinking in
day practice in the sector. The partnership
the industry and strongly believes in bringing
creates a forum to interact with the leaders in
additional perspectives to its knowledge
the industry and to better analyze their needs
base. For this reason and because it wants to
in order to take their specific requirements
share its success and knowledge with all its
into account when developing integrated
stakeholders, Goodman has been funding the
warehouse solutions.
Goodman Chair in Logistics Management
since 2004.

Venlo North Logistics Centre, Netherlands


8
About the research project+

Three industries were selected: the


pharmaceutical, the chemical, and the food
and beverage industry. We received 52
responses, which gave us a lot of insights
into the supply chain function in these three
selected industries. Figure 1 shows how the
respondents are divided over these three
industries.
In a second phase, a shorter version of the
questionnaire was developed. This web-
based survey was distributed on a large
The research has been carried out by a team scale, to the supply chain community. In total,
of academics and practitioners. 743 respondents filled out this questionnaire,
coming from multiple industries, as is shown
Three professors from Vlerick Leuven in Figure 2.
Gent Management School, Robert Boute,
Roland Van Dierdonck and Ann Vereecke, In this report, we will discuss the results
joined forces with two expert consultants, from both phases of the research. We will
Steven Serneels and Pieter Tillon, from S&V present the profile and the role of the supply
Management Consultants. chain manager which has been distilled from
the large group of 743 managers. Where
The research consisted of two major phases. appropriate, we will zoom in on the three
In a first phase, a questionnaire was sent to selected industries, and give more detail
approximately 100 supply chain managers in on the supply chain organization in these
a selection of industries, in Western Europe. industries.
The questionnaire included questions on
the profile of the supply chain manager, as
well as his position in the organization. For
example: Who is he (or she)? What is his
educational background? How experienced
is he? How does he allocate his time? What
is the scope of his function? To whom in the
organization is he reporting?

Figure 1 Figure 2
Respondents in phase one Respondents in phase two

Food and beverage 19 Food and beverage 17


Chemicals 31 Chemicals
Pharmaceutical Retail and distribution 30
Consumer goods
Automotive 8
Electronics
Pharmaceutical
Heavy industry 7
Textile and clothing 4
Glass
Metal 7
8
Other 4
50 3 2 6
4
9

Part 1+ Supply Chain Managers,


who are they?
10 Part 1+
Supply Chain Managers, who are they?

Whats in a name? Its a mens world


There are about as many different titles Gender diversity is not a typical trait of the
on business cards as there are supply supply chain world! Only 13% of the supply
chain managers. The most popular titles chain managers with distribution responsibility
obviously are Supply Chain Manager are female, as is shown in Figure 3. The
and Supply Chain Director. Other number differs somewhat depending on
managers carry the title Logistics Director, the job content. Among the supply chain
Director Procurement and Logistics, managers who have sourcing as their main
Director Supply Chain, Director Supply responsibility, we find 19% female managers,
Chain and Manufacturing, Head Of whereas only 11% of the supply chain
Supply Chain, Operations and Sourcing managers who have distribution are female.
Director, or even more creative titles such Supply chain management still is a mens
as Director Logistics Business Systems, world.
Strategic Planning Leader, Supply Chain
Competence Leader, Customer Service of highly educated managers
and Forecast Manager or Logistics Network
Leader. This diversity in job titles tells us The typical supply chain manager is highly
that either there is no standard supply chain educated. Figure 4 tells us that almost
function in the market, or we havent come to all supply chain managers have a higher
a standard business card title yet. education degree. 62% took their higher
education at university. These numbers differ
across countries, as can be seen in Table 1. In
the UK, the vast majority (76%) of the supply
chain managers took a higher education at
university level. Belgium scores quite similar
Figure 3 (69%). In the Netherlands, however, just
Gender (n=743)
below half of the supply chain managers
13
have a higher education at university level
Female
Male (47%); the other half (50%) have taken a
higher education at non-university level, which
is many more than in the UK (only 16%) or
Belgium (26%). Unavoidably, the differences
in educational systems across the countries
in Europe have an impact on the profile of the
87 supply chain managers in these countries.

Figure 4 Figure 5
Level of education (n=743) Educational background (n=743)

3 3
Secondary School Engineering 13
Higher education at Physical Sciences 30
2
non-university level Management or Economics
Higher education at 32 Social Sciences
university level Other
Other

6
62
49
11

Figure 5 shows that management, The vast majority of the supply chain
economics and engineering are the most managers took their supply chain education
popular educational background of the on the job. Figure 6 shows indeed that less
supply chain manager. than half of the supply chain managers (42%)
report a substantial education in the field.
Again, we observe differences across
Belgium and the Netherlands score fairly
countries, as indicated in Table 2. In the
similar, with 45% and 49% respectively.
Netherlands, there are considerably more
The supply chain managers in the UK score
supply chain managers with a background
lower, with only 30% reporting a substantial
in management or economics (63%),
education in supply chain management. As
compared to 42% in Belgium and 39% in
the discipline of Supply Chain Management
the United Kingdom. Belgium, on the other
and its educational programs only exist for
hand, has proportionally more engineers
10 years, these numbers could be considered
(38%, against only 16% in The Netherlands
relatively high. Nevertheless, we cannot
and the UK). Finally, we observe that in the
ignore that almost 60% of the supply chain
UK there are more supply chain managers
managers didnt enjoy any formal supply
with a background in physical sciences in
chain education. This should be an area of
comparison to the other countries.
concern for the CEO.
It seems that it is not too important in which
field the supply chain manager took his
first education. What matters most is the
capability for continuous learning, either
on the job, or through advanced executive
course work, or a combination of both.

Table 1
Level of education by country

Belgium The Netherlands UK


Secondary school 3% 2% 3%
Higher education, non-university level 26% 50% 16%
Higher education, university level 69% 47% 76%
Other 2% 1% 5%

Table 2
Educational background by country

Belgium The Netherlands UK


Engineering 38% 16% 16%
physical sciences 5% 2% 21%
management or economics 42% 63% 38%
social sciences 4% 1% 11%
Other 11% 18% 14%
12 Part 1+
Supply Chain Managers, who are they?
(cont)

In a recent Harvard Business Review Loyal to the job, loyal to the company
article, Slone, Mentzer and Dittmann warn
Figure 7 indicates from which departments the
that many CEOs fail to realize that supply
supply chain managers are recruited. Four out
chain has become such a complicated
of ten supply chain managers are coming from
set of activities touching many business
the logistics or supply chain department, whilst
functions and processes, reaching beyond
20% of them are recruited from the operations
the enterprise, and presenting a range of
department. Few (about 10%) are coming from
strategic opportunities that it cant be
marketing and sales or procurement.
competently managed by the uninitiated, no
matter how generally capable they might be. The logistics or supply chain department is
Senior executives need to have a background probably the most obvious one to recruit
in supply chain management: formal the supply chain manager from. However,
education, significant prior experience, or because of the broad scope and the
both. (Slone et al., 2007) As we will see later, interdisciplinary nature of the function, it is
the level of prior experience of the top supply quite natural that we see people coming from
chain manager is usually quite high; the data very different functional backgrounds as
on education in supply chain management, supply chain managers.
on the other hand, is less encouraging. Table 3 summarizes the years of experience
Most supply chain managers take their of the supply chain managers in a supply
professional education in the first 15 years chain function and in the company they
of their career. It is striking that 16% of the currently work in. The majority of the supply
junior supply chain managers, who have chain managers (72%) have been in a supply
been in their function for less than 2 years, chain function for more than 5 years. Also,
report a substantial supply chain education. about half of the supply chain managers
The success of the relatively new degrees (53%) have been with their current employer
in logistics and supply chain management for more than 5 years. It seems to be a
offered at Master level in universities and community of professionals who are loyal to
other institutions of higher education seems the job and loyal to the company.
to have an impact on the inflow of people in However, we observe (again) a striking
the supply chain function. difference across countries. We find the
lowest degree of loyalty in the Netherlands:
only 41% of the supply chain managers in
the Netherlands have been with their current
employer for more than 5 years, against 62%
in Belgium and 63% in the UK.

Figure 6 Figure 7
Education in SCM (n=743) Functional background (n=743)

No Logistics/supply chain department 11


Yes Operations 1
Marketing and Sales 5
Finance 3
42 ICT 41
4
Research & development
Procurement 4
58 HR
Other
11

20
13

Interestingly, 30% of the supply chain Overall, the profile of the supply chain
managers have many years of experience in manager that emerges from the statistics
a supply chain function, but have joined their shows us an experienced person, who is
current employer in the course of the past loyal to the supply chain profession, and loyal
5 years only. This shows that there is a job to the company.
market of highly experienced supply chain
Obviously, this high level of experience
managers, willing to change employer.
and seniority is a strong advantage that
Table 4 shows the same statistics, but guarantees a good knowledge of the supply
only for those supply chain managers who chain and a good understanding of supply
report to be the highest in rank in supply chain challenges. On the other hand, if not
chain management in their company (350 well managed, the drawback can be a lack
of the 743 managers), the top supply chain of new ideas and cross-functional initiatives.
managers. It is therefore important that attention is paid
to continuous learning and to interaction and
Clearly, these top supply chain managers
coordination with other functions within the
are very experienced: 78% of them have
company, as well as with other partners in
been in a supply chain function for more than
the supply chain. We will come back to the
5 years; 58% have been in the company
need for these coordination mechanisms in
for more than 5 years. Again here the data
Part Two of this report.
shows that about one third of the top supply
chain managers (30%) have been hired from
outside the company over the last 5 years.

Table 3
Years of experience (n=743)

% of SC managers Years with current employer Total


5 years or less 6 years or more
5 years or less 17% 12% 28%
Years in SC function
6 years or more 30% 41% 72%
Total 47% 53% 100%

Table 4
Years of experience (n=350)

% of SC TOP managers Years with current employer Total


5 years or less 6 years or more
5 years or less 12% 10% 22%
Years in SC function
6 years or more 30% 48% 78%
Total 42% 58% 100%
14 Part 1+
Supply Chain Managers, who are they?
(cont)

The group of experienced supply chain It seems that companies are not very much
managers who have joined the company inclined to invest in supply chain education
recently, shows a higher proportion of for their employees, or they cant afford
managers with substantial supply chain the time it takes before the investment in
education (56%), compared to the managers education brings return to the company.
who have grown into their job from within the However, they do value it in their recruitment
company (43%), as is shown in Table 5. of new talent.
Table 5
Years of experience (n=743)

% of SC managers Years with current employer


with SC education 5 years or less 6 years or more
5 years or less 32% 20%
Years in SC function
6 years or more 56% 43%

More than a functional expert


A long list of skills and competencies The second group of skills in terms of
has been presented to the supply chain importance, are all related to the functional
managers. They have been asked to indicate expertise: logistic expertise, knowledge
how important each of those skills and of planning and inventory management
competencies is for their function (see Figure systems, knowledge of process analysis
8), as well as how important they expect it to techniques, ICT skills, and technical skills.
be in three years (see Figure 10).
Third comes a group of skills that are related
By far the most important skills of todays to the business context. These skills score
supply chain manager are the soft skills: lower in importance. In this category we
communication, decision making, people find knowledge of international business
management and leadership, coordination practices, of law and regulations, and of
and cooperation, and negotiation are all rated environmental issues.
as very important.

Figure 8
Importance of skills today (n=743)

1. Soft skills Communication skills


Decision making skills
People management/leadership skills
Coordination and cooperation skills
Analytical skills
2. Functional expertise Negotiation skills
Logistics expertise (eg. cost analysis, budgeting)
Planning and inventory management skills
Knowledge of international business practices
Knowledge of process analysis techniques
ICT skills
Technical skills related to product and processes
3. Knowledge of business context Knowledge of laws & regulations
Knowledge of environmental issues
1 2 3 4 5
not important very important
15

Figure 9 The future effectiveness of the supply chain,


T-shaped cometency profile however, will come from the managers ability
to demonstrate the true business value to his
Research & Marketing colleagues in other departments, and his ability
Finance
Development & Sales
to align his decisions with the decisions taken
in these other departments. This requires an
extra set of skills, such as communication,
leadership, and coordination skills.
Supply chain
Some projects that illustrate this interaction
with other departments are:
+ In a Cost-to-Serve project, the supply
chain manager demonstrates to his
The current competency profile of the supply
colleagues in Marketing and Sales
chain manager can best be described as the
what the impact is of customer service
T-shaped profile, as is sketched in Figure 9.
requirements on the cost in the entire
+ on the one hand he needs the in-depth supply chain, and thus on the bottom-line
supply chain knowledge in order to be financial result.
taken seriously in his own functional
+ In order to reduce portfolio complexity,
domain, and to be able to translate
colleagues in R&D and Marketing and
corporate or business ideas into concrete
Sales should be made aware of the
actions in his area. This is represented by
financial impact of introducing new
the vertical bar of the T.
products, new specifications, new
+ on the other hand he needs to understand options or new components.
the language and concerns of his
+ In a Cash-to-Serve project, the supply
colleagues in R&D, Finance and Marketing
chain manager teams up with the finance
& Sales. He needs to reach out to and
manager to better control the working
interact with these departments. This is
capital of the company.
represented by the horizontal bar of the
T. Without this interaction, his function The supply chain manager who matches
will be limited to the more operational this T-shaped profile is thus not only a good
aspect of the supply chain: the nuts and technical expert, but also a good people
bolts in the factory and the bricks and manager, who is able to interact with his
wheels of logistics. This operational aspect colleagues in other departments. This
is important, since it brings efficiency explains the importance of soft skills for
in the supply chain; it is what many todays supply chain managers.
companies have been focusing on for the
past ten or twenty years.
16 Part 1+
Supply Chain Managers, who are they?
(cont)

The future is even more demanding Supply Chain Manager The new CXO ?
None of the skills is expected to decrease in Although supply chain management is a
importance in the near future (see Figure 10). young profession, the supply chain function
This tells us that the bar is being raised for has reached the strategic level in many
the supply chain manager; the job requires companies. This clearly shows from the
ever more skills and competencies. statistics on the position of the supply chain
manager in the organization. Among the top
Interestingly, the third category of skills
supply chain managers, 74% report directly
the knowledge of the business context - is
to the CEO or to the general manager of their
expected to gain in importance more than
business unit; 70% of the top supply chain
the soft skills and the functional expertise.
managers are a member of the executive
The globalization and the growing awareness
committee in their company or business
of the climate change are having an impact
unit; and 41% report being a member of the
on the skill set that is required for the supply
board. Clearly, we find the manager who is in
chain manager!
charge of the supply chain at C-level in most
If this trend indeed takes place, the supply of the companies.
chain manager of tomorrow needs to have
In the Netherlands only 68% of the top
a well balanced competence profile, with a
supply chain managers report to the CEO
good blend of soft skills, in-depth functional
or general manager, compared to 81% in
expertise, and a good understanding of the
Belgium and 78% in UK. Analogously, 65%
business context. Developing this skill set
of the top supply chain managers is member
takes time and requires a willingness to invest
of the Executive committee, compared to
in education and training.
71% in Belgium and 85% in UK.

Figure 10
Expected change in importance of skills (n=743)

1. Knowledge of business context Knowledge of environmental issues


Knowledge of laws & regulations
Knowledge of international business practices
ICT skills
2. Functional expertise Negotiation skills
Technical skills related to product and processes
Logistics expertise (eg. cost analysis, budgeting)
People management/leadership skills
Knowledge of process analysis techniques
Coordination and cooperation skills
Decision making skills
Planning and inventory management skills
Communication skills
Analytical skills
0,0 0,1 0,2 0,3 0,4 0,5 0,6 0,7
no increase large increase
17

Part 2+ Organising for supply


chain management
18 Part 2+
Organising for supply chain management

In Part Two we report on how companies Figure 11


structure their supply chain management Functional responsibilities of the top SC Manager (n=743)

organisations. We focus on the various


tasks that are assigned to the supply chain Deliver
Make 25
26
manager, and on the coordination that Source
Source & deliver
takes place with other functions, other Make & deliver
departments, and also external partners. Source & make
Source, make & deliver
3
7
In order to do so, we investigate the
responsibilities of the top Supply Chain 12
8
Manager, being the highest person 17
responsible for supply chain management in
the business unit.
In addition to this planning responsibility, the
Only one out of four is a full scope top supply chain managers show different
supply chain manager blends of the three functional responsibilities,
as can be seen in Figure 11. About one quarter
Describing how companies organize for
(26%) of the top supply chain managers carry
supply chain management starts with
all three functional responsibilities: source,
understanding the scope of the supply
make and deliver. They are what we would call
chain function. We have used the Supply
the full scope supply chain manager, taking
Chain Operations Reference-model (SCOR-
care of the integration of the functional areas,
model) as the basis for the description of
being the process master rather than the
the responsibilities in the supply chain. The
functional specialist.
SCOR-model is a process reference model
that has been developed and endorsed by Yet, as the statistics show, this full scope
the Supply-Chain Council to describe the supply chain manager represents only one
business activities associated with all phases quarter of the population. Most of the supply
in the supply chain (see http://www.supply- chain managers carry a mix of two of the three
chain.org/ for the most recent version of the functional responsibilities, or are even focusing
SCOR-model). on only one of the functional responsibilities.
The group of supply chain managers with only
The SCOR-model distinguishes four major
delivery responsibility is as large as the group
categories of activities and responsibilities
of the full scope supply chain managers. The
in the supply chain: plan, source or
combination of sourcing and delivery, leaving
procurement, make or manufacturing, and
the make function probably for a colleague as
deliver or distribution. We will describe the
manufacturing manager, is also fairly common
supply chain managers function in terms of
(17%). This chart clearly shows that supply
these four categories of responsibilities.
chain management has a different meaning
Planning is part of almost every supply for different companies.
chain managers job. 85% of the top supply
Part Three of this report discusses in more
chain managers have indicated this as one
depth the profile of the different groups of
of their responsibilities.
supply chain managers that seem to emerge.
In Part Four, we will try to better understand
what determines the scope of the supply
chain function, based on the more in-depth
data on the three selected industries, that
is, the pharmaceutical, the chemical and the
food and beverage industry.
19

Disappointingly isolated, Figure 12


with little coordination Degree of coordination with other departments (n=52)

Supply chain management is all about Design


coordination, at least this is what the
Marketing and Sales
textbooks say.
Finance
We have tested this statement through our Suppliers
in-depth study in the three selected industries
Customers
pharmaceuticals, chemicals and food
0 1 2 3 4 5
and beverages where we asked a set of no use high use

questions about the intensity of coordination formal meetings and agreements


informal discussions and communication
liason persons

with other departments within the company,


and with suppliers and customers. We
This observation is not very encouraging.
separated the coordination according to
We acknowledge that it is not easy to define
the mechanism used. Coordination can
cross-functional coordination mechanisms,
indeed take place in a formalized way. For
as it often brings with it the perception
example, through service level agreements
of downgrading the power of functional
(SLA), rules, policies, standards, manuals,
managers such as Marketing and Sales,
formal meetings, task forces, permanent
Production, R&D and the like. On the other
teams, or standing committees. It can also
hand, more mature organisations have shown
happen through informal discussions and
that a lot of value can come from a more
communication. Or it can be organized
integrated approach across the different
through the use of liaison people. This can
functional disciplines. It is in these companies
be accomplished for example through co-
that the S&OP (Sales and Operations
location of units, job rotation between units,
Planning) process has been implemented
coordinator roles spending time in other
succesfully over the last years. It is also this
units, managers transferred temporarily from
S&OP process that will provide the supply
or to another unit, or integrator roles with
chain manager of the future the required
responsibilities in other units.
permanent organisational platform to build
Our data clearly shows that liaison persons the bridge towards his colleagues of Finance,
are not common practice. (See Figure 12) Marketing and Sales and R&D.
Most coordination happens through informal
discussions and communication, and
(somewhat less) through formal meetings
and agreements. Anyhow, the overall degree
of coordination scores only moderate: the
average degree of use of all coordination
mechanisms scores only 2,8 on the 1-to-5
scale (where 1 means no use, and 5 means
high use). We have to conclude that the
interaction with other departments and with
suppliers and customers is not yet common
practice.
20 Part 2+
Organising for supply chain management
(cont)

A well balanced time allocation Figure 13


Time allocation of the SC Manager (n=743)
Obviously, the supply chain manager will
spend quite some time managing his or her Missionary 17 16
department. This involves the operational, Consultant
Managing Executive
day-to-day supervision. However, this is not Internal Integrator
External Integrator
his or her only task. Involvement in project
15
work is equally important to guarantee
25
that supply chain improvements are
implemented. One would also expect that
the supply chain manager shares his or her 26
expertise and experience with other people
in the organization. Finally, supply chain
management is by definition an integrative
function. One would therefore expect the + the Internal Integrator, who takes
supply chain manager to build bridges responsibility for issues not only related
with other departments, as well as with the to the supply chain (such as chairing the
external partners, that is, customers and S&OP meeting, being involved in product
suppliers. In sum, one would expect the development etc)
supply chain managers to divide their time at + the External Integrator, who takes
work between five different roles: responsibilities for issues and relationships
+ the Missionary, who is convincing, with suppliers and/or customers
educating and training people in the Figure 13 shows that the supply chain
importance of supply chain management managers divide their time in a fairly balanced
+ the Consultant, working on assigned way over the five roles. Half of the time at
projects related to supply chain work is dedicated to the role of consultant
management and managing executive. The interaction with
other departments and with suppliers and
+ the Managing Executive, supervising and customers is substantial, but not dominant in
deploying the day-to-day activities of the the time allocation.
supply chain department
21

Part 3+ Same title, different job


focus on dominant profiles
22 Part 3+
Same title, different job
focus on dominant profiles

Three dominant profiles of supply Figure 14


chain managers Functional responsibilities of the SC Manager (n=52)

In Part Two, we have observed that the scope Deliver 11


of the function of the supply chain managers Source, make & deliver
Source & deliver
differs considerably. While most of them have Other 17
36

planning responsibility, their functional scope


can be any combination of the typical three
areas of responsibility, that is, source, make
or deliver. Three of these combinations are
more common than the other ones, as we 36
saw in Figure 11: deliver, source and deliver,
and the full scope combination of source,
make and deliver. responsibility on top of a combination
As we have stated in the introduction of this of functional responsibilities. Figure 14
report, our data collection has been more shows these combinations of functional
in-depth for three selected industries: the responsibilities of the supply chain managers
pharmaceutical, the chemical and the food in the three industries. Clearly three dominant
and beverage industry. In this part of the profiles of supply chain managers emerge:
report, we focus on these three industries. the downstream supply chain manager who
takes care of planning and distribution. The
Also here, the vast majority of the supply up and downstream supply chain manager,
chain managers (86%) have planning who takes care of planning, sourcing and

Table 6
Years of experience (n=52)

Profile: Deliver Years with current employer Total


0 to 5 years 6 years or more
0 to 5 years 2 5 7
Years in SC function
6 years or more 5 8 13
Total 7 13 20

Profile: Source and deliver Years with current employer Total


0 to 5 years 6 years or more
0 to 5 years 0 1 1
Years in SC function
6 years or more 2 3 5
Total 2 4 6

Profile: Source and make and deliver Years with current employer Total
0 to 5 years 6 years or more
0 to 5 years 0 1 1
Years in SC function
6 years or more 2 10 12
Total 2 11 13
23

distribution. And thirdly, the full scope the general manager in the business unit) is
supply chain manager, who combines substantially higher in the category of the full
all four responsibilities, that is planning, scope supply chain managers than in the
sourcing, manufacturing, and distribution. other two categories. The same conclusion
In what follows, we will describe these three holds for the percentage of managers being
dominant profiles in more detail. a member of the board or the executive
committee of the company or the business
Table 6 shows that almost all full scope
unit. This tells us that the full scope supply
supply chain managers have been in the
chain managers, who are overlooking the
company for more than five years, and
three functional areas, play a strategic role in
have been in a supply chain function for
the company, whereas the ones who have
more than five years. They are clearly quite
a more limited functional scope are working
senior managers. This proportion is much
more on an operational or tactical level.
lower for the downstream supply chain
managers. Quite a few of them have been This image is confirmed by the data on the
in the company for less than six years, and/ responsibility of our three profiles of supply
or have been in a supply chain function for chain managers (see Figure 16). In terms of
less than six years. They are rather junior operational and planning responsibility, we
managers. The up and downstream supply dont see a significant difference between
chain managers are positioned somewhat in the three categories. However, the full
between in terms of years of experience. scope supply chain managers have a higher
level of strategic responsibility. The extra
Figure 15 shows that the percentage of supply
responsibilities they have, compared to their
chain managers reporting to the CEO (or to
colleagues in the other two categories are,
Figure 15
not surprisingly, related to manufacturing.
Reporting level (n=52) They typically are in charge of manufacturing
network design, of the decision of what to
Deliver make where and of technology decisions.
They also have strategic sourcing
Source & deliver responsibility, which is equally the case for
their up and downstream colleagues.
Source, make & deliver
In Figure 17, we can observe a clear
difference in the time allocation of our supply
%0 10 20 30 40 50 60 chain managers.
Reporting to the CEO Member of board (or exec comm.)

Figure 16 Figure 17
Level of responsibility (n=52) Time allocation of the SC manager (n=52)

Deliver Deliver Missionary


13 23 31 24 10 Consultant
Managing Executive
Source & deliver Internal Integrator
Source & deliver External Integrator
17 24 31 13 15
Source, make & deliver

Source, make & deliver


11 17 42 16 14
0 1 2 3 4 5
Operational responsibility Planning responsibility %0 20 40 60 80 100
Strategic responsibility
24 Part 3+
Same title, different job
focus on dominant profiles
(cont)

The full scope supply chain manager spends The full scope supply chain managers
a great deal of his time as the managing have a broad range of responsibilities.
executive. This is less the case for the other Their function combines the sourcing,
two categories of supply chain managers, who manufacturing and distribution responsibility.
spend more time as consultant. These all round managers are clearly the
more senior managers, and they occupy a
They have a more balanced time allocation,
strategic position in their company. They
dividing their time more evenly over the roles
have strategic responsibility in sourcing and
of the managing executive, the consultant
in manufacturing. Many of them report to the
and the integrator.
CEO and are a member of the board or the
Bringing these characteristics together, we executive committee in their business unit.
get a better picture of the three profiles of
supply chain managers that prevail in the Different industry, different supply
pharmaceutical, chemical and food and chain managers?
beverage industries.
Finally, we looked into the industry in which
The downstream supply chain managers they are active. Table 7 shows a striking
are in charge of planning and distribution difference. In the pharmaceutical industry,
and thus have a limited, functional scope. the vast majority of supply chain managers
They have a fairly junior profile; they typically are downstream supply chain managers.
have only a few years of experience in In the chemical industry, we still find many
supply chain management or they joined the downstream supply chain managers,
company in the last couple of years. They but also a large proportion of up and
carry mainly operational responsibility and downstream supply chain managers. In
planning responsibility. Because of their the food and beverage industry on the other
limited scope, they feel the need to interact hand, we mainly find full scope supply chain
with other departments in the company, managers, next to again a large proportion
which makes them internal integrators. of downstream supply chain managers.
The up and downstream supply chain This suggests that the preference for one of
managers combine sourcing and distribution the three profiles of supply chain managers is
responsibility. They are less junior than the dictated by some industry characteristics. It
typical downstream supply chain manager. looks like different industries need a different
Quite a few of them report to the CEO and/or supply chain organization. This warrants
are a member of the board or the executive further investigation. In Part Four, we will
committee. therefore analyze and compare the supply
chain organization of the three industries: the
pharmaceutical, the chemical and the food
and beverage industry.

Table 7
Profile of SC managers by industry (n=52)

Pharmaceuticals Chemicals Food & beverages


Deliver 58% 30% 32%
Source & deliver 14% 50% 0%
Source, make & deliver 14% 10% 58%
Other 14% 10% 10%
Total 100% 100% 100%
25

Part 4+ Different industries need different


supply chain organisations
26 Part 4+
Different industries need different supply
chain organisations

The scope of the supply chain responsibility is typically not part of their job.
function differs Apparently, a colleague in the organization is
in charge of sourcing and/or manufacturing.
In the previous sections, we have discussed
the four main elements of the supply chain So clearly, the supply chain manager in
function: planning, sourcing, manufacturing the pharmaceutical industry doesnt have
and distribution. When comparing the supply an overall, cross-functional responsibility.
chain managers across the three industries Rather, his attention is focused on getting
that we studied pharmaceuticals, chemicals the product to the market, whilst others in
and food and beverages we observe clear the organization are focusing on getting the
differences in the scope of their function. product sourced and produced.
In Part Three, we had already observed that The scope of the supply chain function in the
the downstream supply chain managers chemical industry differs from the scope in
are well represented in the pharmaceutical the pharmaceutical industry in one aspect:
industry. When looking at the responsibilities sourcing. Given that we have already observed
of all supply chain managers in this industry, that this industry has a relatively large
we clearly see this focus on planning and number of up and downstream supply chain
distribution (see Figure 18). The majority managers, it doesnt come as a surprise that
of the supply chain managers in the more supply chain managers have sourcing
pharmaceutical companies have planning as one of their responsibilities (see Figure 19)
as one of their responsibilities. And every compared to the pharmaceutical industry.
single one of them is in charge of distribution
However, the chemical industry compares
(deliver). The source and make
to the pharmaceutical industry in its small
proportion of supply chain managers with
Figure 18 manufacturing responsibility.
Scope of the SC function in the pharmaceutical industry
The scope of the supply chain function in
Plan the food and beverage industry is typically
Source broader (see Figure 20). Most supply chain
Make
managers have all four responsibilities:
planning, sourcing, manufacturing and
Deliver
% 0 20 40 60 80 100
distribution. In this industry, we seem to
find the managers that correspond best
Plan with the common definition of supply
Source Make Deliver
chain management as a cross-functional,
integrative, process oriented area.

Figure 19 Figure 20
Scope of the SC function in the chemical industry Scope of the SC function in the food and beverage industry

Plan Plan

Source Source

Make Make

Deliver Deliver
% 0 20 40 60 80 100 % 0 20 40 60 80 100

Plan Plan

Source Make Deliver Source Make Deliver


27

The position of the supply chain The top supply chain manager in the
manager differs pharmaceutical industry spends his or her
time mainly as the managing executive, the
The supply chain managers in these three
consultant and the internal integrator. In
industries do not only differ in terms of
the chemical industry, the top supply chain
the scope of their function; they also on
manager spends proportionally less time as
average spend their time differently, as is
integrator, and more time as the managing
shown in Figure 21.
executive. Finally, in the food and beverage
industry, the supply chain manager spends
even more of his time as the managing
executive. Being in charge of all three
Figure 21
functional areas sourcing, manufacturing
Time allocation of the SC manager and distribution he or she apparently
manages these areas by delegating
Pharmaceuticals Missionary responsibilities in a rather hierarchical
15 23 26 21 15 Consultant
Managing Executive
organization model.
Internal Integrator
Chemicals External Integrator Another remarkable difference is the
13 26 33 17 11
percentage of top supply chain managers
Food & beverages
that report to the CEO: not a single one of the
11 15 42 19 13 respondents in the pharmaceutical industry,
%0 20 40 60 80 100
against about one third (30%) in the chemical
industry, up to almost one out of two (47%) in
the food and beverage industry.

Figure 22 In sum, the three industries show important


SC organisation in the food and beverage industry differences in their supply chain organization. In
the food and beverage industry, the integration
CEO of the three functional areas is embedded in
the position of the supply chain manager, who
acts as the managing executive, overlooking
CFO Supply chain Marketing & Sales the functional areas, and who often reports to
the CEO. The organization chart in Figure 22
illustrates this position.
Source Make Deliver
The supply chain manager in the
pharmaceutical industry on the other hand is
more active as an integrator. He or she has
a more limited scope in his responsibilities,
Figure 23
SC organisation in the pharmaceutical industry but manages the supply chain by integrating
across functions with his colleagues in the
company, thus stimulating and facilitating
CEO
the process view of the supply chain. This
position is illustrated in Figure 23.
CFO COO Marketing & Sales The position of the supply chain manager in
the chemical industry is less outspoken, and
seems to be some kind of blend of the model
Source Make Supply chain that we observed in the other two industries.
28 Part 4+
Different industries need different supply
chain organisations
(cont)

The strategic importance of the supply is on manufacturing or innovation, the supply


chain differs chain gets less strategic attention, which is
reflected in the more functional orientation of
How to explain the striking difference in supply
the supply chain manager, and consequently,
chain organization in the pharmaceutical
in the need to integrate decision making with
industry on the one hand and the food and
colleagues in the organization.
beverage industry on the other hand?
It is interesting to observe that the three
A factor that definitely plays a role is the
industries in our study indeed position
importance of the supply chain relative to
the supply chain at different levels of
the functional areas in the company. In the
strategic importance. Several indicators
pharmaceutical industry, manufacturing plays
illustrate this difference.
a critical role. The need for strict control over
the quality of the product, the importance of One indicator of the strategic importance
getting new products to the market rapidly, of the supply chain is the attention it gets at
the advanced and protected manufacturing board level. It is striking that the percentage
technology, all justify the existence of a of the top supply chain managers that are a
separate responsibility for manufacturing, member of the board of the company (or the
that is not combined with the responsibility executive committee of the business unit)
for sourcing or distribution. This criticality of differs. The pharmaceutical industry scores
manufacturing can be a stimulus to design the lowest with only 29%. The chemical industry
organization structure on a functional basis. comes next with 40%. And the food and
beverage industry scores highest with 47%.
In the food and beverage industry on the
other hand, the tight relationship with the A second indicator is the opinion of the
retail sector may explain the integrative supply chain managers about the role of the
approach to supply chain management. supply chain in the company. They were
Retailers are powerful players, who impose asked to rate the strategic importance of
service on their suppliers, and expect their supply chain on a 4-point scale, ranging
frequent and reliable deliveries at a low cost. from a rather operational supply chain,
In order to fulfill these requirements, a strong characterized by lots of fire fighting (level 1),
coordination across the supply chain is a to a supply chain that is driving the business
prerequisite, which creates the need for a strategy (level 4). (See Table 8)
high-level executive in the organization who
Interestingly, not a single supply chain
overlooks all aspects of the chain.
manager reported that his company was
This seems to suggest that, depending at level 4. More than 70% of the managers
on where the power is - that is, whether it thought their company was at level 3. The
is with a group of powerful customers or difference between the three industries was
with a critical functional area - integrative striking when looking at the percentage of
supply chain issues may or may not be companies that had indicated level 1. In
on the strategic agenda of the company. the pharmaceutical industry, 33% of the
We therefore believe that the scope of the managers indicated level 1, against only 7%
function of the supply chain manager is in the chemical industry and 8% in the food
directly linked to the strategic importance of and beverage industry.
the supply chain in the company. Strategy
and structure go hand in hand. If the supply
chain is seen as a strategic weapon, we
find supply chain managers with a broad,
company-wide scope. If the strategic focus
29

Table 8
Supply chain maturity levels

Level 1 The main role of the supply chain is to avoid interruption


Level 2 We try to meet supply chain standards in our sector
Level 3 Our supply chain strategy is an important enabler for the business strategy
Level 4 Our supply chain strategy drives the business strategy

Table 9
Days of inventory

Pharmaceuticals Chemicals Food &


Beverages
Raw materials 38 36 14
Work-in-progress 71 11 4
finished products 68 49 18
Total 177 96 36

The three industries also score very The structure of the supply chain differs
differently in terms of the number of days
Not only do these three industries differ in
of inventory. (See Table 9) The average
terms of the strategic importance of their
company in the food and beverage industry
supply chain. They also differ in terms of the
reports 36 days of inventory, against 96 days
complexity of the structure of their supply
in the chemical industry and 177 days in the
chain, ranging from rather short, local chains,
pharmaceutical industry.
to truly global chains.
Obviously, the high level of inventory is to
As one can see in Table 10 (overpage),
some extent explained by technological
the proportion of global sourcing, global
process characteristics that ask for large
manufacturing and global sales is the highest
batch sizes and safety stocks. But it probably
in the pharmaceutical industry. Compared
also signals that the pharmaceutical, and to
to the companies in the other two industries,
some extent also the chemical companies,
the pharmaceutical companies have the most
have not (yet) paid as much attention to
global supply chain. The chemical companies
inventory reduction as the food and beverage
distribute their products predominantly in
companies. This again suggests that the
Europe. Most of their manufacturing and
supply chain function has received more
sourcing is European or global. The food and
strategic attention in the food and beverage
beverage companies, not surprisingly, have
industry than it has in the other two industries.
the majority of their sourcing, manufacturing
In sum, we conclude that relatively and sales at the national or the European level.
spoken - the strategic importance of the
In sum, we find the most global chains in
supply chain is considered rather low in the
the pharmaceutical industry. The chains in
pharmaceutical industry, at medium level in
the chemical industry are mainly European,
the chemical industry, and high in the food
whereas the chains in the food and beverage
and beverage industry.
industry are local or European.
30

Table 10
Degree of internationalisation of the supply chain

Pharmaceuticals Chemicals Food &


beverages
Source
% national sourcing 22% 26% 27%
% continental sourcing (exc. national) 48% 46% 58%
% global sourcing (exc. continent) 30% 28% 15%
Make
% of companies with manufacturing at:
+ one site 0% 12% 8%
+ more than one site in the same country 0% 0% 19%
+ sites in a few countries in EU 11% 44% 62%
+ sites in various continents, globally 89% 44% 11%
Deliver
% national sales 25% 16% 40%
% continental sales (exc. national) 46% 65% 53%
% global sales (exc. continent) 29% 19% 7%

Figure 24
Supply chain organisation for different industries

High Plan
Relative strategic importance of the supply chain

Source Make Deliver

Food and beverages

Plan
Medium
Source Make Deliver

Chemicals

Plan

Source Make Deliver

Low Pharmaceuticals
Supply chain structure

National/European European Global


31

Bringing it all together This framework is based on the insights from


our study in the three selected industries. The
Figure 24 brings both dimensions together
framework answers many questions, yet at
and thus helps to understand the different
the same time raises a new set of questions.
position of the supply chain managers in the
What about industries with even more global
three industries.
supply chains than the pharmaceutical
The high level of strategic importance in industry? What about industries in which
the food and beverage industry asks for an the supply chain is strategically even more
overall responsibility of the supply chain important than it is in the food and beverage
managers. Since the supply chain is rather industry? What about industries with a
local, this overall responsibility is also strategically crucial and complex, global
feasible. At the other end of the spectrum, we supply chain? The electronics industry may
find the pharmaceutical companies, where well be an example. This remains the subject
the complexity of the global supply chain for future research.
makes it much more difficult to combine
all functions into a single responsibility.
Moreover the strategic importance of the
chain scores lower here, making supply chain
integration seem less urgent and less crucial.
32

Appendix+
33

References About the authors


Miller Jeffrey G., Gilmour Peter and Van Robert Boute is assistant professor at Vlerick
Dierdonck Roland, Organising for Materials Leuven Gent Management School.
Management, International Journal of
Steven Serneels is Managing Partner
Operations and Production Management,
Europe at S&V, the Supply Chain Business
1981, Vol 2, nr 1, pp 38-51.
Consultants, a Satyam Company. He is also
Miller Jeffrey G. and Gilmour Peter, part-time researcher at Vlerick Leuven Gent
Materials Managers: Who needs them?, Management School.
Harvard Business Review, July-August 1979,
Roland Van Dierdonck is partner at Vlerick
pp 143-153.
Leuven Gent Management School. He is
Slone Reuben E., Mentzer John T. and Professor emeritus at Ghent University.
Dittmann Paul J., Are you the weakest link
Ann Vereecke is associate professor
in your companys supply chain?, Harvard
and partner at Vlerick Leuven Gent
Business Review, Sept 2007, pp 116-127.
Management School. She is associate
professor at Ghent University.

Contacts
Vlerick Leuven Gent Management School
Operations and Technology
Management Centre
Reep 9
9000 Gent
Belgium
Goodman
Boechoutlaan 55
1850 Strombeek-Bever
Belgium

ISBN-Number 9789078858256
EAN 9789078858256

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