supply chain competencies

8 Must Have Supply Chain Competencies

The underlying Supply Chain technical competencies are skills, knowledge and characteristics that support the effective performance as Supply Chain professional. Given the global Supply Chain demands Supply Chain professional should never stop developing new skills and enhancing existing ones. Here are 8 core supply chain competencies that Supply Chain professionals need to master and continually improve (in no particular order!).

8 Technical Supply Chain Competencies

 

1.    Capacity Planning

Assuring that needed resources (e.g., manufacturing capacity, distribution center capacity, transportation vehicles, etc.) will be available at the right time and place to meet logistics and supply chain needs. In other words, capacity planning focuses on determining the appropriate production levels that the company is capable of completing.

This also includes capacity planning with suppliers, at all manufacturing cells and also critical machine/equipment; this also includes overall Equipment Effectiveness (OEE) and Sales Inventory & Operations Planning (SIOP

2.    Demand Management

The demand management is the process of determining what customer will purchase and when, in other words predicting demand. The good demand management use qualitative and quantitative methods to use customer data to reduce uncertainty, predict short-term incoming demand for use as input into the Sales, Inventory, & Operations Planning (SIOP) process.

The competency includes the use of high analytical techniques, excel spreadsheets and may be software to generate baseline statistical forecasts.      In my view demand management is one the most important Supply Chain competencies.

3.    Order Processing

Out of all supply chain competencies, Order Processing is the most under rated competency. Order processing entails the system that an organisation has for getting orders from customers, checking status of orders, communicating with customers about them, and actually filling the order and making it available for customers. In some business it also include processes until invoicing.

Part of the order processing includes checking inventory status, customer credit and accounts receivable in some businesses. Because the order processing cycle is a key area of customer interface with the organisation, it can have a big impact on a customer’s perception of service and, therefore, satisfaction (Shapiro, B.P. et. al. 1992).

The knowledge and skills necessary to manage the receipt and scheduling of customer orders. Processes included in this competency include standard order receipt, exception identification, and exception resolution. Key to the success of this function are 1) the ability to work effectively with customers to clarify requirements and negotiate solutions when constraints exist, and 2) the ability to work effectively with other company functions to assess ability to meet customer needs and to develop work-around solutions when necessary.

4.    Master Production Scheduling

The Master Production Scheduling is a statement of the anticipated manufacturing schedule for selected items by quantity per planning period (Fogarty and Hoffman 1983; Higgins and Tierney 1990). It is a response to the forecast demand described by production plan, and the actual demand in terms of received customers’ orders.

This supply chain competency also includes evaluation of plant capacity effectively, attaining the strategic objectives of the business as reflected in the production plan.

Unlike a forecast of demand, the master schedule represents a management commitment, authorizing the procurement or manufacturing or materials in most cases.

5.    Inventory Management & Optimization

Inventory management is a practice to manage inventory as working capital. The key objective of inventory management is to increase corporate profitability through improved inventory activities such as demand planning, inventory optimization, safety stock management, excess and obsolete inventory management or right inventory levels to meet customer services expectation with minimum possible inventory. You can read another useful definition of inventory management here.

You can find 18 Targeted Inventory Reduction Strategies for Supply Chain Professionals

6.    Materials Replenishment Planning

SAP has defined this competency very well as, “the main function of material requirements planning is to guarantee material availability, that is, it is used to procure or produce the requirement quantities on time both for internal purposes and for sales and distribution. This process involves the monitoring of stocks and, in particular, the automatic creation of procurement proposals for purchasing and production.

In doing so, material requirements planning tries to strike the best balance possible between

  • Optimizing the service level and
  • Minimizing costs and capital lockup.

The material requirements planning process needs all the information on stocks, stock reservations, and stocks on order to calculate quantities, and also needs information on lead times and procurement times to calculate dates. The material requirements planning defines a suitable MRP and lot-sizing procedure for each material to determine procurement proposals“.

This supply chain competency includes the ability to take the Master Production Schedule replenishment quantities and “explode” quantities through the bill of materials to create component requirements, which are compared against on-hand and on-order and forecast. Purchasing or manufacturing orders are subsequently planned and either placed or deferred by pull in or push out messages.

7.    Logistics, Warehousing and Distribution

One of the key supply chain competence is to management physical flow of the goods, which mean the knowledge and skills necessary to effectively manage logistics communication, warehouse and storage management, material handling and distribution of goods (including reverse logistics).

This includes activities like Goods-in (receiving), puty-a-way to stores, picking, packing, shipping and managing return goods from customer. The competency includes the knowledge and understanding of above-mentioned activities, creating right processes as well as effective application.

8.    Knowledge of Continuous Improvement Processes or Methods

As the name suggest knowledge of the processes or methods that seek to improve performance, which assumes more and smaller incremental improvement steps. In general learning and implementing the best known of these are the aforementioned: lean manufacturing (JIT), Six Sigma, Lean Six Sigma, and Agile .

Bu learning these philosophies it is not the rate of improvement which is important, it is the momentum of improvement in the area you want to improve.

Final Thoughts:

Those are the 8 most indispensable Supply Chain competencies I believe. Each of them has definitely given my career a huge technical edge. I hope some of them are helpful for you too.

Which competency is your favorite of the above?

Or do you want to add any more technical competencies I have missed?

You might want to reflect above supply chain competencies and design awesome custom resume in 24 hours .

Reference:

Benson P. Shapiro, V.K.Rangan. and J.J. Svioka, “Staple Yourself an Prder, “Harvard Business Review 70, no. 4 (July – Aug. 1992), pp. 113-22.

SAP – Material Requirements Planning (PP-MRP)




19 thoughts on “8 Must Have Supply Chain Competencies

  1. I have been in the supply business for some time now. Your post is packed with useful information that I can definitely use. I favor inventory management and optimization.

  2. Interesting. Incomplete, but interesting nevertheless.

    But, with warranted attention to certain SCM functionality, the REAL missing piece(s) relate to the ultimate must-have, those attributes that constitute authentic and effective leadership. We face many talent shortages; the greatest, imho, is a yawning chasm between need and the current state in SCM leadership. We can fix the functionality challenge. But, what is our capacity and stomach for the tougher chall nge of creatg leadership where little exists today.

  3. Thanks Dr, very useful input. I have question.. are we need to take any SCM professional exam in order to make ourself well prepared in SCM?

  4. Thanks for sharing!
    I work as a Customer Demand Planner and I find very usuful everything you have provided.
    Overall, we need also to highlight the importance of analysing the data and take action. Sometimes, we have so many info, like fcst, sales, Epos, customer fcst, promo activities, distribution channel for every SKU, production dates planned etc… we update the spredsheets without taking time to analyze this info.
    Is there anybody who wants to share with me how they cummulate in an excel file every info effectively and in an easy manner, so as with a glance to see what’s going “wrong”?
    Thank you in advance

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