Essential Skills for Supply Chain Leaders in Asia during Pandemic

Essential Skills for Supply Chain Leaders in Asia during Pandemic

The Asian Institute of Management conducted a study across orgainsations in Asia to identify crucial skills and competencies required by supply chain managers and leaders in Asia. While most studies focus on USA and Europe, we recognised the unique challenges faced by Asian supply chains, especially during the pandemic. Inspired by McKinsey’s 2020 consultancy report, which emphasizes transforming supply chains rather than temporary fixes, we believe a comprehensive approach to reskilling supply chain professionals is essential to meet future demands.

Changing Landscape of Supply Chain Executives

Traditionally, supply chain executives excelled in managing functions like transportation, warehousing, inventory, and production planning but supply chain process extends beyond the firm, involving global relationships with suppliers and customers. Leading firms now recognize the need for supply chain leaders who can coordinate the entire end-to-end process, despite not having complete control. This has shifted the role of supply chain executives from functional to process-oriented, making supply chain leadership an integral part of the executive team.

Our study identifies critical supply chain skills needed by managers and leaders in Asia and suggests key competencies for all supply chain professionals. We conducted quantitative and qualitative research, including one-on-one interviews with supply chain managers to validate essential skills for success and was divided into three skill categories.

1. Supply Chain Competency: Focuses on core competencies to optimize operations.
2. Managerial Competency: Vital for effective leadership, collaboration, and adaptation to dynamic environments.
3. IT Competency: Critical for leveraging technology like smart sensors, AI, and data analytics to enhance visibility and control costs.

Figure 1: Identifying gaps in supply chain competency

Overall Findings from three segments of industry were identified namely logistics, manufacturing and trading.

The logistics industry is known for its cost sensitivity and customer-oriented approach. While striving to keep costs low, it also aims to meet customer expectations efficiently. The pandemic has led to an increase in remote work, but warehouse operations still require personnel to move goods. Automation in warehousing, coupled with a warehouse management systems, emerges as a logical option to address this challenge. Embracing automation would generate valuable data for analysis, enabling optimization of operations. Consequently, data analysis becomes a critical skill in identifying performance gaps and opportunities for improvement within the logistics industry. Soft skills also play a vital role in managing client relationships and motivating employees, given the labor-intensive nature of the industry in Asia.

Additionally, the industry expects its employees to possess problem-solving skills and customer orientation. Daily troubleshooting is common, making problem-solving an essential skill for resolving issues efficiently. Moreover, maintaining excellent customer relationships is vital, as certain issues directly impact clients. Hence, being customer-oriented is crucial to retain clients, especially when switching costs are low within the logistics industry.

Manufacturing Industry: The manufacturing industry faces challenges stemming from material and labour shortages due to pandemic-related lockdowns. Key interviewees highlight data analysis as a crucial skill to gain better insights into processes and customer behaviors during the pandemic. Utilizing data aids in identifying sales trends and automating simple decision-making processes, thereby enhancing productivity. Many companies are leveraging data from their ERP systems to analyze consumer behavior and align their processes with the principles of Industry 4.0.

Soft skills also play a pivotal role in managing client expectations and fostering collaboration. Given the uncertain demand during the pandemic, effective collaboration and joint forecasting with customers and suppliers become critical for success. As an example, Siam Cement Group in Thailand is adapting its supply chain design and strategies during the pandemic (as detailed in the table below).

Table 1: Supply chain design and strategies during pandemic

Prior to the pandemic, supply chain strategies were primarily focused on cost-saving measures, employing lean management principles. Companies emphasized offshore sourcing, single suppliers, and centralized warehousing to optimize their operations. However, the global supply chain faced challenges during the pandemic, prompting the need for transformation towards greater resilience while maintaining competitiveness. In response to these challenges, risk mitigation must be a crucial considerations when redesigning the supply chain networks, as exemplified by Siam Cement Group’s approach.

To enhance resilience, supply chain strategies have shifted from cost-saving to redundancy by engaging multiple suppliers, particularly from local or nearshore sources, to mitigate supply disruptions. During this period, partnership and closed collaborations with suppliers and customers are vital, involving resource, facility, and data sharing to strengthen relationships while reducing potential supply risks. Embracing new technologies is inevitable for Siam Cement Group, optimizing operational efficiency by implementing advanced automation in warehouse operations and embracing cutting-edge transportation technologies like AI, Machine Learning, and Autonomous Vehicle Driving.

Trading and Retailing Industries: The trading and retailing industries have not been immune to supply chain disruptions. Many traders and retailers faced inventory shortages due to delayed deliveries of goods. Recognizing the critical importance of proper inventory management during these times, most interviewees emphasized the need to constantly review and adjust inventory policies and supplier reliability for survival.

To effectively manage inventory, many companies in the trading and retailing sector have adopted inventory systems for monitoring and planning purposes. Given the substantial number of Stock Keeping Units (SKUs) to manage, implementing an inventory system becomes a logical choice to optimize inventory levels. Establishing policies within the system ensures efficient inventory management.

Interviewees from trading and retailing sectors firmly believe that effective inventory management is vital in today’s context. They stress the need to increase safety stock levels to reduce the risk of production slowdowns or stoppages, focusing on supply assurance and shortage management. Shortage management is a strategic approach that evaluates the number of items required by a specific date, guiding purchasing managers to procure items accordingly. On the other hand, supply assurance encompasses a long-term outlook, considering potential shortages and obsolescence while developing comprehensive supply plans for all parts.

Trading and retailing companies should reassess their inventory strategies during the pandemic to prioritize order flexibility and service level performance. This includes managing long lead times, strategic inventory positioning, maintaining safety stock to address unexpected demands, and implementing dynamic, localized replenishment models. Such strategies ensure materials are delivered precisely when needed, not merely based on forecasts.

By revisiting and optimizing their inventory management practices, companies can better navigate the challenges posed by the pandemic and emerge stronger, with more resilient supply chains that efficiently cater to evolving market demands.

According to Chilibeli’s from Indonesia, Mr. Damon Yue, the company is responding swiftly to disruptions by establishing a flexible ecosystem of suppliers and partners capable of handling sudden shortfalls and adapting to produce new products.

Conclusion

The insights gathered from our study have highlighted several crucial skills that have emerged as key pillars in navigating the challenges posed by the pandemic within the supply chain industry:

1. Embracing Information Technology: All interviewees unanimously underscored the importance of being adept in implementing information technology. Leveraging smart sensors, AI, and business intelligence tools can enhance supply visibility, optimize shipping costs, accurately forecast demand, and effectively control inventory. Strategic use of business intelligence and data analytics can significantly drive cost reduction and efficiency across various business functions, with supply chain management benefiting immensely from data-driven insights.
2. Increasing Redundancy in Inventory and Warehouse Space: To mitigate supply chain disruptions caused by supplier uncertainty during lockdowns, it is imperative to increase redundancy in inventory and warehouse space. This proactive measure ensures a buffer against unforeseen delays and ensures a steady supply chain flow, even during turbulent times.
3. Prioritizing Crisis Management and Risk Mitigation: As uncertainties abound during the pandemic, crisis management and risk mitigation take center stage. Supply chain leaders must be vigilant in identifying potential risks associated with managing suppliers and customers. This preparedness is crucial in effectively navigating the unforeseen challenges that might arise.
4. Decision-making and Problem-solving Proficiency: Operational challenges have been abundant during the pandemic, making strong decision-making and problem-solving skills indispensable for supply chain professionals. The ability to quickly and effectively address issues and devise innovative solutions is instrumental in maintaining smooth operations.

The findings from our comprehensive study hold immense value for various stakeholders within the supply chain industry. Human resource managers can use this knowledge to make informed decisions when hiring new talent, ensuring that the workforce possesses the required skills to thrive in the current landscape. Policy makers and educational institutions can utilize these insights to design tailored courses and training programs that equip future supply chain professionals with the necessary skill sets and knowledge to tackle the evolving demands of the industry.