For all that is said and written about investment in IT systems, warehouse automation and the like, the responses of the executives interviewed for this report suggest that the development of the human resources side of supply chain management is just as significant as the rapid technological advances being seen. The position that supply chain directors now customarily occupy in companies underlines the pivotal role they and their teams have in modern retailing.
As published in Retail Week & DWF Supply Chain: Trends and Innovations in Retail 2014-15 report
The most tangible illustration of this is the inclusion of supply chain directors on executive retail boards. “We have gone from a service partner to being on the board,” says a supply chain director of a major specialist retailer. “The influence of supply chain management has increased dramatically,” adds the distribution director of a department store operator.
The distribution director of a fashion retailer, a board director like many of his peers, puts things rather more bluntly, candidly confessing that “in years gone by nobody took a blind bit of notice of me”, and that sentiment is probably far from unique, particularly among the longer-serving supply chain professions. But, according to the virtually unanimous view of those interviewed for this report, supply chain directors are no longer the bridesmaids of retail management.
The same distribution director continues: “There is no question that supply chain does influence the course of events more than we ever have in the past. Supply chain is at the heart of business strategy.”
When asked whether internal collaboration with other functions had improved during the last year, there was a universally positive response, many going on to stress that such collaboration is critical for their businesses.
For example, having supply chain professionals involved from the outset in discussions regarding how and from where to source new products is “critical”, according to the distribution director of a cosmetics retailer.
If no one from the supply chain team is present when the decision to go ahead with sourcing a new product is taken you could end up with “a serious problem at the end of the chain”, he claims. He continues: “It is important for supply chain function people to be present at the beginning of those sorts of discussions. We need visibility from all the functions all the way through the process. Only then will we know that a new product is fit for our supply chain from the outset.”
A supply chain executive at a major retail group also sees a marked increase in collaboration with other functions during the past year. “Internal collaboration with other functions has definitely improved over the last year. This is very much the case between the commercial teams and the traders who are working much more collaboratively with the retail and the supply chain teams. Sitting in splendid isolation and planning stuff to compete in the marketplace can no longer be done without the ability to be able to fulfil it through the distribution channels.”
A supply chain director at a department store operator urges greater collaboration “because improvement depends on intelligence because things are so volatile”, adding that he collaborates with “wider groups of teams than ever before”.
This view is echoed by another supply chain executive at a major national retail group, linking the collaborative trend in particular to the advent of multichannel and omnichannel retailing. “It [internal collaboration] has improved and it had to. If we are talking multichannel and omnichannel there are so many business areas that are touched by it, so many areas where full co-operation is needed and where your best minds need to be applied to ensure you have the best solutions. You have to have supply chain involved, you have to have IT involved and retail. And all the interested parties have to be around the table. You can’t work in silos anymore.”
Perhaps because of the broader remit supply chain teams have, prospects for greater responsibility and a sense that what they are doing has a direct impact on the company’s fortunes, there is a view among some supply chain directors that working in supply chain has become a more attractive proposition.
A supply chain director at a national specialist retail chain says working in supply chain has even become “a little bit trendy”. He continues: “It is a more interesting job than it used to be. There is a different sort of person coming into supply chain now. A different calibre of person with a different set of skills. And certainly there are more women. In the last four years the number of senior managers I have in my team has increased by 32%. People want to come into this field now.”
That said, the distribution director of a department store operator points to a lack of qualified personnel to meet the new professional demands in supply chain management, and predicts that this will get worse as the economy strengthens. “There is a shortage of supply chain professionals, particularly those with systems experience and automation experience. We are playing catch-up in the professional pool to meet the changes that have happened. I don’t think a lot of retailers have really felt that yet but, as the markets pick up again and people begin to invest again, skilled resource will be in short supply.”
Indeed, the supply chain director of a fashion retailer also says it is “a struggle” to retain talent right now because “the market is moving”, rating retaining talent as the third most pressing challenge facing the company’s supply chain team. “The key for me is taking a chance and giving people responsibility. Today, young people want to feel good about what they are doing and I find when they are given early responsibility to prove themselves that can be more likely to instil loyalty to the company than a bonus in their pay packet.”
Training and Retention
With experience possibly in short supply, training is more important than ever. As with any branch of retail, ensuring that able people have the chance for career progression is vital. “For me the most important thing when I spot talent is to make sure there is enough room for them to grow and room for them to grow into,” says a supply chain director at a national specialist chain.
While many of the comments suggest the training environment in supply chain is improving, some believe training for supply chain professionals still requires further development, particularly in light of the more challenging role they in many cases now have to perform. “People working in the supply chain business have got to become more professional,” says the distribution director of a fashion retailer. “The demands on supply chain workers are increasing and they need more training. That is a good thing because as requirements increase we will have better qualified people who will be more motivated and better rewarded.”
This supply chain director goes on to make a distinction between how human capital is being developed to improve the supply chain function and the introduction of new technology. “I would regard it as supply chain evolution rather than supply chain innovation. Innovation suggests we are constantly trying to re-invent the wheel but that is not really true. Things are evolving because of the demands of multi and omnichannel. But it is still very much a bricks and mortar and flesh and blood environment.”
When asked how the retail supply chain in five years’ time will differ from that of today, a department store distribution director says rather bleakly: “The big change will be that there will be a lot less people in it. They will be replaced by more technology and more robots. It is technology that is driving supply chain: automation and machines replacing men.”
Watch out for our next blog post which will look at innovation in supply chain development.
If you have any questions or would like more information, please contact Hilary Ross Partner & Head of Retail, Food & Hospitality sector.This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.