6 COMMON MYTHS ABOUT THE GLOBAL SUPPLY CHAIN

In today’s digitally driven marketplace, almost nothing moves without a supply chain.

Despite the fact that supply chains govern our modern economies, there are lots of misconceptions about managing them.

Here are six of the most persistent, stubborn myths about supply chain management.

IT’S ALL ABOUT PURCHASING

Back in the 1980s, professionals that were involved

in purchasing were often viewed as “buyers” or “clerks”.

It was more of an administrative function based on history and intuition.

But that early interpretation completely misses the increasingly strategic role that supply chain management now plays in the modern digital enterprise.

PURCHASING ROLE

SUPPLY CHAINMANAGEMENT

INVESTMENTS

RISK MITIGATION

IMPORT/EXPORT

CASH UTILIZATION

TAXES

COMPLIANCE

Today it’s closer to finance than operations with supply chain professionals managing many functions:

SUPPLY CHAIN MANAGEMENT ISN’T A VIABLE CAREER PATH

The Supply Chain industry is undergoing one of the most massive talent shifts we have ever seen.*Cisco Systems John Kern, Senior Vice President of Supply Chain*The Wall Street Journal

Today, for every 6 openings in supply chain management, there is only 1 qualified candidate.*

*Supply and Demand Chain Executive

And with available jobs expected to grow by 26 percent between 2010 and 2020, that ratio is projected to grow to as high as 9 openings to 1 qualified candidate.

*Supply and Demand Chain Executive

The myth that supply chain management is still primarily a purchasing role keeps many young professionals from considering it as a career.

A graduating engineer typically wouldn’t think, I’m going to get into supply chain. He or she is more likely to think, I’m going to get into manufacturing. In reality, companies like Jabil employ entire teams of engineers to help manage its supply chain. It’s a skill set that is in very high demand.Joe McBeth, VP Global Supply Chain, Jabil

This is compounded by the fact that only a handful of universities offer appropriate courses.

As a result, there is a distinct shortage of

qualified individuals ready to step into such roles today.

Despite the talent gap, managing the supply chain is becoming an exciting career track that involves professionals from disciplines such as statistics, engineering, finance and data management.

IT’S ALL ABOUT EXPERIENCE AND INTUITION

A few decades ago most supply chain decisions were based on institutional knowledge and industry experience rather than data. The human element is still vital but...

If you try to manage the complexity of modern supply chains based only on gut, YOU WILL LOSE.

NETWORKEDMACHINES

CONNECTEDWAREHOUSES

REAL-TIMESALES REPORTS

Digital technology has made the promise of Big Data a reality.

But data alone, doesn’t solve the problem. Companies must be willing to invest in tools that can actually deliver actionable intelligence from it.

This will allow them to: predict the next big thing, or avoid the next big pitfall.

YOUR SUPPLY CHAIN IS UNIQUE

Businesses don’t have isolated supply chains in a global market.

Just because you “only make cars”, doesn’t mean you’re not competing for the same base resources and services supporting healthcare devices.

And just because your business hasn’t been forced to operate in the global marketplace yet, don’t think that day won’t come.

RAZOR THIN INVENTORIES ARE ALWAYS BETTER

Many managers responsible for purchasing fixate on controlling costs and, therefore, do all they can to keep inventories as low as possible.

But fixating on controlling costs through low inventories can actually increase financial risk.

Let’s say, for example, a single sourced part that is required to complete the production of a sub-assembly that you make and sell for $1,000, is part of a final product that sells for $100,000.

Lets also assume your weighted average cost of capital is usually about 1-2% percent per month.

In this example, the potential loss of revenue and profit from one lost sale dwarfs the inventory cost when you analyze the total profit loss of the final product.

Is the silo affect blinding your managers from the big picture?

SUPPLY CHAINS SHOULD ALWAYS REDUCE COST

CASH COST

Cash and cost are usually the key metrics for supply chain management, but is that really the right priority?

COSTCASH

REVENUEPROFIT

What about profit and revenue? Aren’t they more important?

Ask yourself how much risk can you take in managing assets and costs in order to generate the potential for profit and increased revenue?

What if your supply chain intelligence allowed you to understand market movement and trends before your competitors?

What if you could proactively fulfill that demand before anyone else?

Not only does this allow you to gain market share but you also have the opportunity to do it at a higher margin.

Leaders in Intelligent Digital Supply Chain are already enjoying these financial gains.

Dispelling the most common misconceptions is the first step in achieving supply chain excellence. To take your next step, contact Jabil today.

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