APQC’s latest research on supply chain priorities and trends has shown 2024 to be another challenging year for supply chain professionals. This has been reflected in events such as the ongoing Red Sea crisis, the Baltimore bridge crash and Hurricane Beryl causing disruption for businesses. 

The need for a resilient and adaptive strategy to successfully manage these unpredictable events and demand is crucial. For example, more organisations are looking to enhance their supply chain management (SCM) capabilities to better manage the flow of goods, information and financial resources from suppliers to consumers to react to different scenarios at short notice. When done right, effective SCM can drive operational efficiency and simultaneously boost customer satisfaction. (A ‘win win’ situation!)

But organisations are also battling supply chain worker shortages and high staff turnover, particularly across frontline operational employees and planning, logistics and management employees. Long hours, unfavourable working conditions and restrictive career paths are all adding to the problem. So, with many an obstacle facing supply chain professionals, how can they effectively combine people and technology to ensure SCM is meeting its best potential?

Core challenges in SCM

Among the most pressing concerns in SCM today are demand fluctuations and the need for real-time visibility across the supply chain. It can be incredibly difficult to predict the level of demand facing specific products due to external factors. For instance, significant increases in the cost of energy during the 2022 crisis led to the demand for air fryers to rocket by 3000% in the UK, and this is just one of many such examples..

Economic shifts, changing consumer preferences and disruptions in global trade can also impact demand. Companies have to work with suppliers to ramp up supply without overextending resources or holding excess inventory and decrease supply if demand suddenly dips. A comprehensive and unified approach to SCM can enhance visibility, from procurement to delivery, and allow businesses to proactively identify and resolve potential issues before they impact operations.

Unifying SCM and HR 

Technology empowers supply chain management executives to integrate both SCM and HR processes on a single cloud platform. By unifying these functions, organisations gain a holistic view of their operations and workforce. 

With SCM and human capital management (HCM) working together as one unit, more informed decision-making can be actioned with the support of real-time data and predictive analytics. Even when unpredictable global events arise, forecast modelling and simulations can help organisations understand the potential positive and negative impacts on the wider supply chain, including the availability of the workforce. 

To an outsider, positive outcomes in these scenarios may seem like good fortune, but in fact, they are invariably the result of careful planning, strategic foresight and leveraging the right tools and data. 

Organisations can also identify which locations in certain countries are most in need of enhanced staff engagement strategies, or how absences are impacting late product deliveries. It can even inform them of warehouses that are experiencing the highest staff turnover rates and help devise solutions on how to address it. With talent needs and bottlenecks identified, businesses are handed back control and can deploy people, where required, to avoid disruption. With this real-time information, they can also provide an improved employee experience which can help to curb high turnover and repeated absences. 

The evolution of supply chain technology

It’s essential for Chief Supply Chain Officers (CSCOs), operations managers and HR leaders to align on organisational objectives, and a combined SCM and HCM platform allows them to do so. Workforce modelling and predictive algorithms can help to improve workforce capacity planning. In a scenario where a CSCO wants to build a new warehouse in a certain country, HR data can provide visibility of the talent requirements and availability in the local region to ensure that no budget for the build is wasted from a chronic local shortage. 

Emerging technologies are further helping supply chain and HR leaders to gain a competitive advantage. For example, advancements in data pattern reporting are revealing the causes of high turnover rates and other problems in the workforce. 

Augmented analytics can add external data to analyses such as benchmarking or compensation comparisons, or unlock new sources of workers. Advancements in predictive analytics have allowed businesses to compare future sales orders to staffing levels and uncover any urgent capacity needs. These solutions are coming together to reduce supply chain disruptions. Voice interfaces are even providing improved accessibility and speed so users can get answers quicker.

Moving forward, AI will build further on these capabilities by creating the potential for self-learning analytics that will, when integrated with supply chain management, and HR solutions, provide more focused information, much more rapidly than before. This will ultimately drive continuous improvement and efficiency in SCM.

Refining SCM for future growth

In an era where unpredictability has become the norm, mastering SCM is more critical than ever. The challenges of 2024, from natural disasters to workforce shortages, highlight the need for strategies that are both resistant and adaptive to rapid changes. 

Effective SCM, when integrated with HCM functions, can significantly enhance operational efficiency and customer satisfaction.

The next step is to unify supply chain operations and HR on a single platform. Organisations can achieve a comprehensive view of their operations and workforce, enabling better decision-making and workforce planning. 

This holistic approach allows businesses to anticipate and mitigate risks, optimise their resources and remain agile in the face of disruptions.

The benefits of Fourth Industrial Revolution technologies for supply chains are clear – greater operational efficiency, sustainability outcomes, and resilience. 

As companies are deploying these digital solutions throughout their organisations, they are faced with a challenge – how to ensure their people develop the skills needed in this new, more digital supply chain. Here are four aspects any supply chain leader should consider.

Digital Supply Chains must be Human-centric

The manufacturing industry is facing a huge labour shortage. According to the World Economic Forum, more than 10 million manufacturing positions are open today. 

Ther’es no denying AI and machine learning have made significant advancements in recent years. However, people remain the backbone of any successful supply chain. Why this labour gap? One significant cause is the higher demand for tech skills.

As companies go through digital transformation, ensuring people remain at the heart of their supply chain strategy is critical. It’s a simple equation: training current industrial talent for the digital world while also investing in the new generation builds a more vibrant, efficient, and future-ready operation. It’s unlikely we will see a sudden surge of digital supply chain talents on the market soon. Therefore, the most obvious step for organisations to take is ensuring their workforce is upskilling and reskilling for the future.

Between 2021 and 2023, Schneider Electric increased digital talents across our supply chain organisation by 67%. This upskilling took place from the shopfloor to senior management. Here’s how we did it.

Reskill, upskill: connecting and nurturing digital skills in shopfloor employees

No matter how advanced technology becomes, it is the people at the ground level who are its primary users. Employee skills can make or break the success of implemented technology. Any digital skills strategy must be inclusive and include your employees working in your factories and distribution centres.

At Schneider Electric, we are equipping our shopfloor employees to become data-driven wizards and automation gurus. One critical step is ensuring they are digitally connected. 

We have connected approximately 40,000 employees across 175 factories and distribution centres to a digital communication tool, enabling them to receive and send communication in real-time. 

This breaks down traditional barriers and connects the shopfloor teams to managers and remote experts. It also ensures the team has greater access to knowledge and problem-solving, sharing best practices and troubleshooting tips across sites. This helps us scale best practices, including digital solutions, across the organisation.

You can’t change what you don’t measure. That’s why we have mapped digital competency across the supply chain organisation – from individuals at the site level to leadership. This transparency has tangible benefits: personalised learning paths for talents across the organisation, skill-gap analysis that empowers managers to drive development of their teams, and executive visibility so we can make informed decisions on where to invest.

We have also created a dedicated program to develop and engage shopfloor employees in automation manufacturing, focusing on three critical domains: programing and automation, digital and technological proficiency, and data analysis interpretation. This ensures these employees can develop the skills and expertise they need for today and tomorrow.

Fostering a Growth Culture: A Collaboration of Learning and Adaptability

The volatility and uncertainty we have seen over the last few years has revealed the new skills, capabilities, and mindset needed for success. Our new world requires new ways of working, and it’s crucial to create a culture that values continuous learning, creative problem-solving, and innovation.

It’s important for leaders to encourage curiosity and open-mindedness, recognize and reward behaviours that demonstrate learning and innovation, and offer flexible learning opportunities that accommodate individual needs. This way, both organisations and their employees can adapt to new technologies and changes in business operations at their own pace, ensuring a smooth digital transformation. 

Our Catalyst Leadership program gives our people managers the skills to be more agile leaders and support their teams in their development.

But there are digital tools that can shape the culture too. Open Talent Market is an AI-driven technology that has helped Schneider Electric match our internal supply and demand of talent in a transparent, borderless, and unbiased way. Employees use it to develop, grow, and shape their futures. Now, they can select a mentor, contribute to a project, or even apply for a new role.

Navigating Towards the Future

As we navigate towards an exciting yet ambiguous digital future, it’s crucial to remember that people make technology work. The key is to create a digitally competent and operationally effective workforce that can navigate the stormy waters of digital transformation.

Building digital expertise and instilling a culture of continuous learning within your supply chain organisation is not easy. However, those willing to invest time, effort and resources will find that they are better prepared to tackle future challenges, seize opportunities, and effectively drive their organisation’s digital transformation journey.

As 2024 continues to unfold, the lessons of the past three years are more clearly visible than ever before. Economic pressures, geopolitical conflict, and climate disruption are no longer freak events. They are the new normal and they are here, in one form or another, to stay. 

Supply chains face an increasingly complex and challenging landscape where the strategies that translated to success pre-pandemic are no longer viable. “Greater efficiency [comes] at the expense of diminished flexibility and effectiveness — a tradeoff the pandemic-induced supply chain disruptions have made painfully clear,” analysts from the Boston Consulting Group argue. 

Resilience, cost, and environmental impact all need to be held in a much more even balance in 2024 than they did five years ago. As a result, supply chain leaders need to reevaluate their approach to building and maintaining relationships throughout their supplier networks. 

A collaborative approach to supplier ecosystems 

In the face of a hostile supply chain landscape, supply chain leaders can potentially mitigate risk and exposure to disruption by taking a less transactional approach to supplier relationships. As noted by Fraser Robinson, co-founder and CEO of Beacon, in a recent interview, “there’s no way to eliminate risk and volatility from your supply chain entirely, but improving information sharing and collaboration across stakeholders can go a long way to help control the fallout.”

This more collaborative approach rests on the twin foundational pillars of trust and technology. 

Collaborative digital tools that allow suppliers and buyers up and down the value chain increased visibility can proactively address and mitigate potential delays while replicating wins. This level of visibility can ensure that all parties along the value chain can see exactly where goods and materials are at the same time—in real time. In a market defined by disruptions, this holistic visibility increases organisations’ ability to identify and respond to said disruption dramatically. 

This level of information sharing obviously requires an amount of trust. This is especially true in a climate where cyber attacks are ever on the rise, with ecosystem partners being an increasingly common source of successful breaches. 

Despite this, however, there are significant benefits of creating trust up and down the supply chain. According to Robinson, these positives are measurable all the way from raw material production to the consumer. Robinson notes that “Certainly, in our world, it takes time to build that trust from the ground up, so that’s why we just have fact-based solutions. Trust is built much faster if the system accurately reflects reality, and users learn that very quickly.”