Supply chain management skills to sense and seize opportunities Peter Tatham Griffith Business School, Griffith University, Gold Coast, Australia Yong Wu Griffith Business School, Griffith University, Gold Coast, Australia Gyöngyi Kovács The HUMLOG Institute, Hanken School of Economics, Helsinki, Finland Tim Butcher Griffith Business School, Griffith University, Nathan, Australia Corresponding Author: Peter Tatham: [email protected], Phone: +61 (0)7 555 28490 This is a so-called personal version (author's manuscript as accepted for publishing after the review process but prior to final layout and copyediting) of the article: Tatham, P., Wu, Y., Kovac, G. & Butcher, T. (2017) International Journal of Logistics Management 28(2), 266-356. doi: 10.1108/IJLM-04-2014-0066 This version is stored in the Institutional Repository of the Hanken School of Economics, Dhanken. Readers are asked to use the official publication in references. Abstract Purpose The aim of this study is to investigate the supply chain management skills that support the sensing and seizing of opportunities in a changing business environment. Design/methodology/approach Based on previous literature on the T-shaped model of supply chain management skills, data was collected through a mail survey among Australian business executives. The resultant skill sets are grouped along factors that support the sensing vs. seizing of opportunities. Findings Interestingly from an SCM perspective, functional logistics-related skills are important to maintain competitiveness but are not the ones contributing to a firm’s ability to sense opportunities and threats, and to seize opportunities in a changing business environment. We therefore support the notion that supply chain managers should be managers first. Factual SCM knowledge is the solid basis, but otherwise only an entry requirement in this field. Research limitations/implications Problem-solving skills, along with forecasting and customer/supplier relationship management, stand out as important components that support the ability of supply chain managers to sense and shape opportunities and threats in a turbulent business environment. This focus would tend to suggest the importance of supply chain integration and collaboration as management approaches. Other SCM-skills from warehousing and inventory management to transportation and purchasing are more prevalent for maintaining competitiveness. Practical implications The results of the survey, and the consequential analysis, indicate that the content of tertiary level educational programmes should be significantly reviewed to deliver two distinct (but partially overlapping) streams that focus on the generalist and functionalist managers who must work together in the management of increasing global and complex supply chains. Social implications Functional skills often form the basis of training and education programmes for supply chain managers. Whilst these form the solid foundation for their jobs, they are entry requirements at best. In a changing business environment, other skills are needed for success. Given that turbulence is becoming the norm rather than the exception, this finding necessitates rethinking in training and education programmes, as well as in the recruitment of supply chain managers. Originality/value Testing the T-shaped model of supply chain management skills from a dynamic capabilities perspective, the results of our factor analysis lead to a regrouping of skill sets in terms of sensing and seizing opportunities in a turbulent business environment. Keywords: Supply chain management skills, supply chain agility, dynamic capabilities, business turbulence, business volatility, sense and respond Article Classification: Research paper Supply chain management skills to sense and seize opportunities 1. Introduction Although the management of supply chains has reached a high degree of sophistication in many contexts and settings, there is an increasing perception that the basic structures may need revisiting in light of emerging changes in the global business environment. In particular, it has been powerfully argued by academics and practitioners alike, that commerce and industry are faced with an increasing and persisting level of business turbulence (Singh, 2009; Christopher and Holweg, 2011; Shell, 2011; Doheny et al., 2012). In parallel, it is argued that whilst the skills required of supply chains managers have received considerable attention since the field began to emerge in the 1990s (e.g., Murphy and Poist, 1991 to Keller and Özment, 2009; Rossetti and Dooley, 2010; Ellinger et al., 2011; Thomas et al., 2012), these also need to be re-visited in light of the suggested increase in business turbulence. Grounded in an Australian business environment and using the lens of the dynamic capabilities model, this paper draws on the supply chain management (SCM) skills literature in order to investigate the skills required for managing a supply chain in such turbulent times. The resultant research question that the paper addresses is as follows: RQ: Which (groups of) skills support supply chain managers in sensing opportunities and seizing them vs. maintaining the competitiveness of their organisation? Sensing and seizing opportunities is particularly important in turbulent times, and in a turbulent business environment. To date, however, this perspective has not featured in the supply chain skills literature which has traditionally focused on grouping skills in light of the “T-shaped” model (Leonard-Barton, 1995) which distinguishes between functional supply chain (the vertical arm of the “T”) versus overarching general management skills (the horizontal arm) (Mangan and Christopher, 2005). However, taking this model as its basis, our study aims to further develop this approach with a focus on the areas of emphasis that are relevant in supply chain management in turbulent times. In this way, we will address a gap in the current supply chain skills literature which has not yet specifically considered the skills required in this context. It should be noted that, as will be demonstrated in the paper, the research was conducted during a period of considerable business turbulence and, further, that this level of turbulence is continuing and, to an extent, increasing. Thus, we were not able to conduct a comparison between the perceived skills required in non-turbulent times vs. those required in turbulent times – rather, we have identified those skills that are perceived to be important in the latter context, noting that this appears, at least for the time being, to be ‘state normal’. It is accepted that if/when the business world becomes less turbulent, it may well be that a similar skill set is also identified as being important in such a benign business environment. For the time being, however, both recruiters and educators need to be aware of the skills that are perceived to be important by business executives and adjust their operations accordingly. The next section of the paper will begin with a brief discussion of the SCM field and, in particular, its breadth and the managerial implications. This will be followed by a focused review of supply chain skills literature in general, and in relation to turbulence. The research is framed by the dynamic capabilities model (DCM) (e.g., Teece and Pisano, 1994; Teece et al., 1997; Teece, 2007), not least due to its emphasis on dynamic and, indeed, turbulent environments, and the ways in which companies not only respond to these, but can organise their resources in ways that lead to sustainable competitive advantage (Maskell, 2001). In order to meet the aim of the paper, it is clearly important to establish the volatility of the Australian business environment. To achieve this, we further develop, and then apply, Christopher and Holweg’s (2011) Supply Chain Volatility Index (SCVI) to the Australian context. Next we present results from a survey among Australian business executives that indicates the skills that are considered important in terms of SC performance. These are then linked to the DCM framework by means of a dendrogram and the associated analysis. In the final section of the paper we draw out a number of conclusions and areas for further research. 2. The scope of supply chain management According to Bechtel and Jayaram (1997), there were more than 50 definitions of Supply Chain Management at the time their paper was published and, unsurprisingly, the position has worsened over the last 35 years – not least in light of the growth in articles that relate to the SCM field which totalled some 3,000 by the end of 2008 (Stock and Boyer, 2009). Furthermore, there has been an historic lack of clarity between the scope of ‘logistics’ vis-à-vis that of SCM when viewed from the perspective of academics (Larson and Halldórsson, 2004) and practitioners (Larson et al., 2007). Thus, in order to ground this research, we have adopted what we perceive to be the increasingly dominant view which, on the one hand, recognises the overlap between SCM and other disciplines such as operations management (Mangan et al., 2012) and, on the other, distinguishes between SCM and logistics. Under this approach logistics management is increasingly being seen as reflecting the planning, implementing and controlling of the transportation and storage of goods and services (CSCMP, 2014), whereas SCM is positioned at a more strategic level. Thus, Stock and Boyer (2009, p. 706) offer a comprehensive view of the various perspectives and the associated ambit of SCM leading to what they put forward as a consensus definition in which SCM is seen as being “…the management of a network of relationships within a firm and between interdependent organizations and business units consisting of material suppliers, purchasing, production facilities, logistics, marketing, and related systems that facilitate the forward and reverse flow of materials, services, finances and information from the original producer to the final customer with the benefits of adding value, maximizing profitability through efficiencies and achieving customer satisfaction.” This definition has been used to underpin this research, and it will be seen that it reflects the management of three components. The first of these is that of the two-directional flow of materials, finances, services and information. This, in turn, implies the management of networks of relationships within the focal firm and between the focal firm and the remaining entities within the chain (or network). The second component reflects the outcomes of such managerial activity which include added value and/or improved profitability and/or customer satisfaction. The final component recognises the breadth of the organisational areas that SCM has to engage with, from material suppliers through to marketing. As the focus of this research is on SCM skills, our further review has implemented this broad definition in that it searched for related literature in mainstream SCM journals first, and then snow-balled through key articles and their references to find other, similar articles in related journals. It should be noted that the focus was on the skills of supply chain managers, and not on operational employee skills (e.g., Pagell et al., 2000), nor on the discussion on deskilling in general. Furthermore, rather than focusing on skill development and learning, the focus of our study is on differences in skill requirements depending on the business environment of the firm, and of an entire industry. Hence we see skills as essential parts of the dynamic capabilities of the firm and its supply chain. This positioning requires a short review of the key elements of the dynamic capabilities model in light of skills. 3. Skills for SCM in turbulent environments Business environments have changed dramatically in recent years to the point that ‘turbulence’ is frequently referred as the new business normal. The research on the impact of such turbulence is, however, not new. For example, Dawson studied the impacts of turbulence on retail industry in Europe and proposed a number of strategies that firms could adopt to mitigate its effects (Dawson, 1995 as cited in Kotzab et al., 2009; Dawson, 2001). However, as indicated by the macro-analysis in Section 4, the current business environment is demonstrating an increasing level of turbulence, not only in terms of its magnitude, but also in relation to its frequency of occurrence. This, coupled with shorter product and technology lifecycles, more demanding customers, and new ways of conducting business such as omni-channel retailing, creates significant challenges for firms which at a strategic level are characterised by D’Aveni’s (1994) concept of ‘hypercompetition’. In an attempt to address the increased rate of change, Fine introduced the term ‘clockspeed’ to describe an industry’s evolutionary life cycle and argued that the ultimate source of sustainable competitive advantage is a company’s ability to manage its supply chain (Fine, 1998; 2000). In parallel, Lewin et al. (1998) used complexity theory to examine the relationships within firms and between firms noting that globalisation and outsourcing activities extend the management of supply chains far beyond the focal firm and, hence, increase its complexity. Thus, against a background of increasing business environment turbulence, more competitive markets, accelerating clockspeed, and more complex supply chains, it is perceived that there is a compelling need to understand the skills needed by Supply Chain managers as these challenges grow and expand. Unsurprisingly, therefore, as the whole field of SCM has developed, so too have the many lines of people-related research, with a number of key streams including those (a) tracking careers in SCM (Dischinger et al., 2006; La Londe et al., 2010), and (b) developing curricula in this area (Myers et al., 2004; Mangan and Christopher, 2005; Carter et al., 2006; Okongwu, 2007: Allen et al., 2013). Another important area of skills research is the evaluation of differences in skill sets required of supply chain managers vs. various subsets of the discipline (Murphy and Poist, 1993; Gammelgaard and Larson, 2001; Gibson and Cook, 2001; Van Hoek et al., 2002; Rossetti and Dooley, 2010; Kovács et al., 2012), in skills required for various job levels (Pagell et al., 2000; Gabric and McFadden, 2001), and in respect of geographically different requirements (Mangan et al., 2001; Sohal and D’Netto, 2004; Okongwu, 2007; Rahman et al., 2009; Sohal, 2013). Unlike other resources, skills generally do not deplete or deteriorate, but rather improve over time (Molloy et al., 2011), while they maintain the other important aspect of resources in that they are heterogeneous and hard to replicate, if not inimitable (cf. Ramsay, 2011). The aspects of heterogeneity and inimitability contribute to the strategic value of a resource (Azadegan et al., 2008; Hunt and Davis, 2008). In this respect, therefore, the DCM pioneered by Teece and Pisano (1994) was seen to have particular relevance as a theoretical baseline for the research. The DCM is generally conceptualised as developing the Resource Based View (RBV) of a firm, but with a particular focus on the mechanisms by which firms build competitive advantages in times of rapid change. Teece et al. (1997, p. 515) suggest that “Winners in the global market place have been firms that can demonstrate timely responsiveness and rapid and flexible product innovation combined with the management capability to effectively coordinate and redeploy internal and external competencies.” In order to achieve this, the DCM postulates that, in a turbulent business environment, firms must (among other things) have the capacity and capability to (1) sense and shape opportunities and threats; (2) seize these opportunities and (3) reconfigure the enterprise’s assets as necessary to achieve the desired outcomes. Skills contribute to the development of dynamic capabilities which, in turn, are important to a firm’s competitiveness in a rapidly changing and hence, turbulent environment (Teece and Pisano, 1994; Fawcett et al., 2011). “Logistics” has been described as such a dynamic capability (Zhao et al., 2001; Autry et al., 2005; Esper et al., 2007), whilst “SCM” has been regarded a relational capability (Grant, 2009), with the relational aspect capturing also the management of a chain. The dynamism of these capabilities is obviously all the more important in turbulent business environments or, as Eisenhardt and Martin (2000) put it, high-velocity markets. Competitive advantage in such markets depends on the ability to sense and respond to turbulence quickly and proficiently (Teece, 2000, 2007, 2010; Barreto, 2010), an ability for which specific skills play an important role (Butcher et al., 2011). From a DCM perspective, Grant (2009) sees skills as single-task-level capabilities which are then aggregated into higher hierarchies; whilst Gammelgaard and Larson (2001) and Myers et al. (2004) distinguish between skills, attributes, experience, competencies and knowledge on different levels. Furthermore, whilst Grant (2009) consolidates skills into resource bundles, Kovács et al. (2012) develop the idea of hierarchies of skills themselves. However, the more common approach – which is the one we follow – is to merge these concepts together into a number of skill sets. Thus, Dischinger et al. (2006) propose the sets of “functional skills” (i.e. skills that relate to SCM functions), “technical (ICT) skills”, “leadership skills”, “global management skills”, and “experience and credibility”; whereas Gibson and Cook (2001) offer “general management skills”, “interpersonal capabilities”, “technical skills” and “specific [SCM] capabilities”. Other researchers prefer three sets – for example, Murphy and Poist (1991, 2007) refer to these as “logistics skills” which combine functional and technical skills; “business skills” which relate to other business functions as well as to psychology and sociology; and “management skills” that relate to planning and organising, and to personal attributes. Within many, if not all, of these classifications there is a common theme of the need to ensure an appropriate balance between business, technical and functional knowledge, and other “softer” (Vereecke et al., 2008) skills. The skill set approach has been developed further by a number of authors including, Gabric and McFadden (2001), Van Hoek et al. (2002), Mangan and Christopher (2005), Vereecke et al. (2008), and Kovács et al. (2012) all of whom argue for a “T-shaped” skills profile (see Appendix A). This framework uses the analogy of the “T” to argue that practitioners need to have in-depth functional skills (the vertical axis of the “T”) that are complemented by competences in a broader range of, typically, “softer” skills (the horizontal axis). A similar approach has been found in other fields including research and development (Iansiti, 1993), transport (EP, 2006), defence engineering (Weiss, 2005), and IT (Harris, 2009), and this leads to a depth vs. breadth discussion of skills that is reflected in the findings of Mangan and Christopher’s (2005, p.180) that “supply chain managers” would regard themselves as “managers first and logisticians second”. Separately, it is also argued by Butcher (2007) that a reason for the emphasis on general management rather than functional skills may lie in the disparate nature of the SCM profession which is fed by people whose initial work experiences have been in a very broad range of subdisciplines which include engineering, purchasing, transport, IT and warehousing to name but a few. Thus, as such individuals ascend the management tree, they are likely to face the requirement to make decisions that are well beyond their previous experience base. This reinforces the need for the development of a broad range of business management, problem solving and inter-personal skills – especially in view of the horizontal nature of SCM that frequently is required to cut across vertical organisational silos (Christopher, 2011). In light of the requirement for supply chains to be able to respond efficiently and effectively in an increasingly turbulent environment, many authors (e.g., Christopher, 2011; Doheny et al., 2012) argue that a more ‘agile’ approach should be adopted. Whilst there is a continuing debate over the exact meaning of this concept (Gligor and Holcomb, 2012; Sweeney et al., 2015), a detailed analysis of the concept is beyond the scope of this research. Rather, we have adopted the approach of Sarkis (2001) who suggests that it reflects the ability to thrive in an environment of continuous and often unanticipated change. However, Butcher et al. (2011, p. 462) have considered the theoretical impact of a turbulent business environment on the skills of SC managers and concluded that “there is no empirical link between the SCM literature and agility theory”. One may, nevertheless, infer from the agility concept that successful SC managers will demonstrate superior abilities in areas such as: decision making, communication, people management, negotiation, leadership, change management, customer and supplier relationship management. Importantly, all of these skills are present in Mangan and Christopher’s (2005) skills model and this was, therefore, used as the framework underpinning our study. It should also be noted that Mangan and Christopher see their 2005 research as merely a foundation to further investigation of the whole question of the development of the supply chain manager of the future – and this paper is, in part, a response to their challenge. Furthermore, as Christopher and Holweg (2011) note, turbulence is today the norm rather than the exception and this aligns with the more recent view of Doheny et al. (2012, p. 2) who suggest that the potential for catastrophic failure in a company’s supply chain has “... become more acute in recent years as rising volatility, uncertainty, and business complexity have made reacting to – and planning for – changing market conditions more difficult than ever.” 4. Research Design As the aim of this study is to investigate SCM skills in an Australian business environment, an important first step was to ascertain whether the setting of the study could be accurately described as turbulent. In earlier research Christopher and Holweg (2011) presented a Supply Chain Volatility Index (SCVI), the development of which was a response to previously untested assumptions that the globalisation of business, the demanding nature of customers, and market uncertainty are increasing. Whilst these are all well-known assertions in SCM research (e.g. Singh, 2009; Gattorna, 2010) the work of Christopher and Holweg (which was published in the 40th Anniversary Edition of the International Journal of Physical Distribution and Logistics Management) is believed to be the first within the literature to demonstrate this empirically. Christopher and Holweg’s (2011) SCVI displays both the absolute changes in a number of key parameters as well as their rate of change. By plotting the coefficient of variance (CoV) of a number of important economic indicators, they were able to demonstrate that the degree of turbulence being experienced has expanded significantly since 2008. Thus, these authors argued that the business environment has moved from a period of relative tranquillity since the early 1970s into one of considerable, and potentially lasting, fluctuations. This analysis resonates with Shell’s contemporaneous development of long-term scenarios that envisage “an era of revolutionary transitions and considerable turbulence” (Shell, 2008, p.10) and with the continuing macroeconomic volatility noted in Shell (2011). As shown in Table 1, the original SCVI was based on four groups of data relating to (a) currency fluctuations, (b) raw materials, (c) stock markets and (d) shipping costs. We broadened this approach to offer a more global perspective which included additional exchange rates and stock market indicators which were designed to reflect the reality that supply chains are increasingly global and, hence, it is the turbulence in the global business environment that impacts on SCM. Specifically, we selected the exchange rates between the United States and its top five trade partners as sources for financial data as these represent a more global perspective; we added iron ore price index as an indicator for raw materials, not only because iron ore is a commonly used raw material, but also because iron ore is one of Australia’s major exports; we also ‘internationalised’ the selection of stock market indices; and lastly we increased the number of oil price sources from one to three. Table 1 shows the resultant selection of sources, although it should be noted in particular that the Baltic Dry Index (which was a component of Christopher and Holweg’s original research) has been removed from revised calculations as it has been criticised as an economic indicator (Simons, 2011). It has been replaced with the S&P 500 Air Freight & Couriers Price Index as a means of capturing volatility on international transport. Table 1. SCVI Data Sources Type Christopher & Holweg (2011, p.67) study* Parameter Financial EUR/GBP (WMR&DS) exchange rate USD/GBP (WMR&DS) exchange rate UK clearing banks base rate – middle rate Raw materials Gold Bullion LBM USD/troy ounce LME-Copper, grade A three month GBP/MT Stock market VIX – Chicago Board Options Exchange Market Volatility Index Oil Prices Crude Oil-Brent FOM USD/BBL Freight Baltic Dry Index Global SCVI (The Authors)** Parameter USD/CAD exchange rate USD/EURO exchange rate USD/CNY exchange rate USD/JPY exchange rate USD/MEX exchange rate Gold Price Copper Price Iron Ore Price NYSE Tokyo SE London SE Frankfurt SE Brent TAPIS OPEC S&P 500 Air Freight & Couriers Price Index *All data sourced from Thomson Reuters Datastream over the period 1970-2010 except for the Brent Crude Oil price which was from the Energy Information Administration, and VIX which was from the Chicago Board Options Exchange. **All data sourced from Thomson Reuters Datastream for the period 1990-2015. It is fully accepted that the introduction of additional parameters does not necessarily broaden the scope of the index as some of the components may be interdependent and thus, potentially, result in double-counting. We therefore conducted an exploratory factor analysis in order to find the ‘underlying’ factors and this use of exploratory factor analysis was supported by the Kaiser- Meyer-Olkin measure of sampling adequacy (.840) and Bartlett’s test of sphericity. Using Principle Component Analysis with the default settings in SPSS 22.0, this showed that four factors could be extracted which explain about 91.9% of the overall variance. We subsequently stored these four factors for further data analysis. By doing so, we were able to focus on the four factors extracted instead of the original 16 data sources. As expected, not only do these factors change quite dramatically over the years, but also their trends do not follow each other. Next we determined how quickly the data changed. To achieve that, we first calculated the overall data change range (R) for each factor using the difference of the maximum and minimum values in the particular factor, e.g., for factor one (F1), R1 = max (F1) – min (F1). Subsequently, we measured the relative change (C) for any two successive data points (in this case, the values for two consecutive weekdays) in percentage terms over the factor range R. For instance, C1d abs( F1d F1d 1 ) / R1 (1) d measured the relative change C1 of F1 at day d over the previous weekday d – 1. Once the relative change for each factor on each day was calculated, we averaged the minimum, maximum and average change for every day over 30 data points (consecutive weekdays) to smooth any potential abrupt changes over a short time period. The results are plotted in Figure 1, along with their associated trend lines from 01 January 1990 to 22 September 2015. Figure 1: Turbulence in the business environment – the global SCVI The important conclusion from this analysis is that, unsurprisingly, there has been a significant spike in volatility during the period 2007-2009 (i.e. during the global financial crisis, GFC), but even more importantly, the trend lines show that turbulence has been steadily increasing over the years even though the GFC-caused peak has receded. In short, as observed by Rossi (2011, p. 300) in a major economic analysis: “...the key theme of this review is that volatility is the new normal, and we must become accustomed to this.” Our global SCVI extends the Christopher and Holweg (2011) dataset which ended in early 2010 in terms of both time and in the scope of parameters used. Our survey was conducted early 2011 in Australia, which was just after the peak of GFC, but not only was the discussion around the GFC and its implications for business (and, hence, SCM) still highly topical, the overall increasing trend of global turbulence has continued to underline the importance of the subject. The use of a global SCVI is, therefore, entirely applicable to Australia since the country is a global trading nation – indeed, a recent Strategic Review of the Australian Treasury has emphasised the continuing international economic volatility facing the country (Australian Government, 2011). Furthermore, as will be seen from Figure 1, there has been a clear growth in the level of volatility over the last 25 years. Thus, this research was, in part, designed to capture the impact of this development. 5. Survey design and sample Given, therefore, this demonstration of continued and continuing business turbulence, we next considered the question of the skills that are appropriate for supply chain managers in such an environment. In the same way as for the T-shaped model in engineering, existing skills research also lists numerous general vs. domain-specific skills that ‘good’ logisticians, as distinct from supply chain managers, ought to have. Whilst there is no consensus in literature on either the lists of skills or on their grouping into skill sets, there is a clear thread that functional or technical ‘logistics’ skills, though necessary, need in the case of supply chain managers to be complemented with other, more general, softer skills (Murphy and Poist, 1991; Gibson and Cook, 2001; Van Hoek et al., 2002; Mangan and Christopher, 2005; Vereecke et al., 2008). We therefore used a slightly modified version of the list of skills in the Mangan and Christopher (2005) model that reflected the results of earlier research by Kovács and Tatham (2010). Such a survey focuses on employees as the unit of analysis and, therefore, in particular sees such skills as a core element of the resources and capabilities of the firm. The sample of our survey consisted of Australian practitioners. As pointed out above, the timing for administering the survey fits with the GFC, and also with Australia’s status as a global trading nation, hence we expected turbulence to be of importance to these practitioners. The online survey was administered through two key industry bodies, the Chartered Institute and Logistics and Transport (Australia) (CILTA) and the Logistics Association of Australia (LAA). The questions specified that the importance of the skills (on a 7-point Likert scale) should be considered in terms of supply chain performance. A total of 216 valid responses were received, but given our practitioner focus we discounted 6 from students and 12 from academics. Of the remainder, 109 submissions had followed the link published by the LAA, and 89 emanated from the membership of CILTA, with the respondents’ demographics shown in Table 2. The resulting response rates of, in each case, around 8% of the organisation’s membership are low, but not dissimilar to the typical response rate of 10% in electronic surveys as reported by Larson (2005). Table 2. Survey demographics Positions LAA N CILTA Years of experience LAA N CILTA Manager of a Manager 18 16 4–6 5 11 Manager 66 49 7–10 21 10 Other 25 24 11–15 19 14 89 16–25 > 25 Not indicated Sub-total 39 17 8 109 26 23 5 89 Sub-total Total 109 198 198 Education level Professional or vocational Bachelor Graduate Certificate Master Doctor Other Sub-total LAA N CILTA 17 15 29 17 31 26 26 0 6 109 19 3 9 89 198 The effects of non-response bias were further estimated for both cohorts using the methodology of Armstrong and Overton (1977). For each cohort, we compared the mean score for each skill between the first and the fourth quartiles of responses, based on the time the surveys were completed. Among the 32 skills, only two skills were ranked statistically differently (p = 0.05) between the first quartile and the fourth quartile of responses for both cohorts, respectively. The impact (if any) of the non-response bias was, based on this estimation, deemed to be acceptable. The above results were also compared with a separate sample from a similar survey that was administered to the membership of the Chartered Institute of Purchasing and Supply (Australia). Unfortunately, only 36 responses were received from this survey and the sample size was, therefore, deemed to be too small for formal analysis, but those results that were received fully supported the fundamental thrust of the results as discussed below. 6. Findings from the analysis The first finding of the research is that the results from the two cohorts (CILTA and LAA) are, notwithstanding the slightly different aims/objectives of these two organisations (see Appendix B), remarkably similar with a Spearman’s rank correlation coefficient of ρ = 0.95. Agreements are highest for top (9 of 10) and bottom (8) skills, with some variance in the 11th-24th ranks. Generally, the LAA respondents placed slightly greater emphasis on the functional skills which, arguably, reflects the organisation’s deeper practitioner roots. Nonetheless, the overall high agreement, together with the Spearman’s rank correlation coefficient of 0.95, led to a subsequent joint analysis of the two cohorts. Considering the survey results (Table 3 and Figures 2 and 3), the first and most obvious observation is the extent of the overall importance of the horizontal element of the T-shaped model (i.e. the general management (GMS), problem solving (PSS) and interpersonal (IPS) skills). Thus, for example, the highest scoring functional skill (FS) came in at number 13, whilst 4 out of the bottom 5 skills/attributes fell into this category. This outcome aligns with the findings of Sohal’s (2013) survey where, also in an Australian context, the top three competencies identified in his survey of supply chain professionals were an ‘Ability to work effectively with individuals and groups/teams cross culturally, intra and interorganisationally’; ‘Ability to manage relationships in diverse contexts – cross culturally, intra and interorganisationally’; and ‘Ability to manage risks in [a] supply chain and associated issues’ (p. 436). On the other hand, two areas were found to be surprising. The first is the low importance placed on marketing (ranked last) whilst, at the same time, there is a high emphasis on customer relationship management (CRM, ranked 9). On the one hand, the respondents may have been reflecting a clear delineation between the fields of SCM and of marketing but, on the other hand, it may be that CRM has become the process through which demand information is integrated into SCM. The second unanticipated result is the relatively low level of importance placed on reverse logistics. This is surprising given, for example, increases in internet shopping as well as broad consumer pressure to be ‘greener’. Indeed, reverse logistics is generally perceived to be an area in which successful management of the SC as a whole has the potential to achieve significant cost savings (Rogers and Tibben-Lembke, 2001). Yet in this survey the area is not seen as being particularly important and whilst this may simply reflect an Australian perspective, it is consistent with Kovács and Tatham’s (2010) findings. Table 3. Combined LAA/CILTA Skill Ranks (Source: The Authors) LAA + CILTA Rank (N=198) 1 2 3 4 5= 5= 7 8 9= 9= 11 12 13= 13= 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 Skill/Attribute Leadership Problem Solving Supplier Relationship Management (SRM) Negotiation Personnel Management Listening Problem Identification Problem Analysis Customer Relationship Management (CRM) Information Sharing Oral Communication Strategic Management Forecasting Inventory Management Written Communication Change Management Information Gathering Risk Management Logistic Information Systems Stress Management Transport Management Purchasing Project Management Warehousing Information Technology (IT) Financial Accounting Meeting Facilitation Reverse Logistics Import/Export Legal Specification Port/Airport Management Marketing Category IPS PSS GMS IPS IPS IPS PSS PSS GMS PSS IPS GMS FS FS GMS IPS PSS GMS FS IPS FS FS GMS FS GMS GMS IPS FS FS FS FS GMS LAA + CILTA Mean Score (N=198) 6.59 6.40 6.29 6.24 6.21 6.21 6.20 6.18 6.17 6.17 6.08 6.05 6.00 6.00 5.91 5.90 5.84 5.71 5.70 5.68 5.67 5.62 5.61 5.59 5.42 5.34 5.24 4.95 4.94 4.78 4.34 4.11 We conducted a number of group split analyses to evaluate the robustness of the study. A group split in relation to educational levels did not result in any significant differences. Whilst at first sight there is a slightly higher emphasis on general management skills and lower emphasis on interpersonal skills that aligns with an increase in the respondent’s educational level, t-tests could not support the significance of these shifts. The group split in terms of experience is also robust, the only significant difference being that of less experienced respondents placing a slightly higher emphasis on functional logistics skills. The same difference in emphasis based on experience is also to be seen in the Allen et al. (2013) study. In summary, functional skills can be seen as scoring lower when paired with increased education as well as with increased experience, and it is suggested that this relates to the observation of Butcher (2007) that SC managers may enter the profession with some other than logistics/SCM background, impacting on their perception of the importance of functional skills. Overall, the survey confirms the stability of Mangan and Christopher’s (2005) T-shaped model in both a nonEuropean context and also one that reflects the continuing growth of business turbulence. 7. The dynamic capability of managing a supply chain in turbulence More than just noting the ranks of individual skills and skill sets, it is important to understand how they relate to dynamic capabilities and, hence, contribute to a firm’s success in a turbulent business environment. Skills can be seen as single-task capabilities (Grant, 2009) which contribute in their joint resource configuration to higher-level dynamic capabilities, and it is highly relevant, therefore, to evaluate how they are synergised and transformed to dynamic capabilities – with an emphasis on them being dynamic so that they are able to contribute to competitiveness in a turbulent environment (cf. Fawcett et al., 2011). Prior research has, indeed, linked skills to various capabilities although this is generally from the perspective that some skills have been singled out as a capability – for example a purchasing capability (Ramsay, 2001; Hunt and Davis, 2008), logistics information systems as a capability (Autrey et al., 2005; Lai et al., 2008), or logistics as a capability (Zhao et al., 2001; Autry et al., 2005; Esper et al., 2007). Logistics capability is also sometimes taken as a starting point and then disintegrated into various elements including skills (e.g. Olavarrieta and Ellinger, 1997; Zhao et al., 2001; Esper et al., 2007; Paulraj, 2011), although there is no consensus on the grouping of skills into particular capabilities. With this in mind, we plotted boxplots for each of the 32 skills and ranked them in decreasing order according of their respective mean scores, with the result plotted in Figures 2 and 3. Given that (a) there is a clear inflexion point at the mean score of 5.5 for the last 8 variables, and (b) the medians of these variables are less than or equal to 5, we discounted these last 8 variables in the subsequent analysis. Figure 2: Ranking the 32 skills in decreasing Likert mean scores Figure 3: Ranking the 32 skills (with boxplots) in decreasing Likert mean scores (solid dots) To better understand how these 24 skills contribute to SCM in a turbulent business environment, we grouped these skills using the ‘ClustOfVar’ package in R and the resultant cluster dendrogram is depicted in Figure 4. The ‘ClustOfVar’ package is designed to be effective in grouping variables that are strongly related to each other and is, therefore, an ideal candidate for dimension reduction and variable selection (Chavent et al., 2012). Specifically, the function ‘hclustvar’ from the package - which iteratively builds a set of nested partitions of variables (Chavent et al., 2012) - was used to produce Figure 4. Figure 4: Cluster dendrogram of the 24 skills from the ‘ClustOfVar’ package in R Whilst this analysis did not fully position the 24 skills into the four groups within the “T-shaped” model (general management skill (GMS); problem-solving skills (PSS); interpersonal skills (IPS); functional logistic skills (FS)), the skills in each group are generally aligned to the same cluster. That said, some skills are clustered across more than one group. For example, negotiation (IPS) is grouped into the same cluster as forecasting (FS), LIS (FS) and purchasing (FS). This clearly indicates that, while negotiation is classified as an interpersonal skill, it can also be treated as a purchasing-related functional skill due to its paramount importance in procurement. A similar trend can be observed for CRM and SRM. Nevertheless, based on the aggregation levels from the dendrogram, three clusters of variables were suggested and these were extracted using the ‘cutreevar’ function in the ‘ClustOfVar’ package. As will be seen from Table 4 below, whilst the alignment is not absolute, there would appear to be a reasonable degree of linkage to the DCM through Teece’s sense and respond model where he argues that dynamic capabilities can be: “…disaggregated into the capacity (1) to sense and shape opportunities and threats, (2) to seize opportunities, and (3) to maintain competitiveness through enhancing, combining, protecting, and, where necessary, reconfiguring the business enterprise’s intangible and tangible assets.” (Teece, 2007, p. 1319) Table 4 shows the variables (with their category and mean score extracted from Table 3) mapped to each cluster, the mean scores within the clusters, and cluster attributions to the sense and respond model. Specifically, it can be seen that: four (out of five) problem-solving skills can be seen as supporting the capability to sense and shape opportunities and threats the majority of the general management skills and almost all of the inter-personal skills – which are vital for the achievement and maintenance of robust communication and operational execution – are found to contribute to the capability to seize opportunities; the remaining variables, which are mostly functional skills, support the capability to maintain competitiveness. Table 4. Breakdown of the cluster analysis results Skill/Attribute Information gathering Problem identification Problem analysis Problem solving Project management Change management Risk management Strategic management Information sharing Personnel management Listening Oral communication Written communication Stress management Leadership CRM SRM Forecasting Category Mean Score Cluster Mean PSS PSS PSS PSS GMS IPS GMS GMS PSS IPS IPS IPS 5.84 6.20 6.16 6.18 6.40 5.61 5.90 5.71 6.05 6.17 6.21 6.01 6.21 6.08 GMS IPS IPS GMS GMS FS 5.91 5.68 6.59 6.17 6.29 5.92 6.00 DCM Mapping to sense and shape opportunities and threats to seize opportunities to maintain competitiveness through enhancing, combining, protecting, and, Warehousing Inventory management Transport management Purchasing LIS Negotiation FS FS FS FS FS IPS 5.59 6.00 5.67 5.62 5.70 6.24 where necessary, reconfiguring the business enterprise’s intangible and tangible assets Whilst it is fully acknowledged that this linkage to the DCM is exploratory, it will be noted that the cluster analysis grouped functional skills such as warehousing, inventory management, transportation management, purchasing and LIS together and, in doing so, largely supports the functional vs. general management divide of the T-shaped model and of SCM skills models overall. It should also be recognised that the grouping of the first cluster relates well to the problem-solving-related hierarchy of skills as noted in Kovács et al. (2012). On the other hand, when the categorisation in Table 3 was developed by the authors from the existing literature, supplier relationship management (SRM), customer relationship management (CRM) were seen to be general management skills, and negotiation an inter-personal skill – yet they appeared in the functional cluster. It is perceived that, compared with other skills listed in the other two clusters, these skills are more ‘intimate’ or closely related to functional skills and this is, perhaps, an indication that these are key to ensuring the functionality of supply chains. It should be noted that these three skills received higher scores than the rest skills in this cluster and this aligns well with Mangan and Christopher’s (2005) model. The factor groupings in the sense and respond model illustrate a number of important points. First of all, skills in the group of “sense and shape opportunities and threats” have been much emphasised by survey respondents, i.e., with a cluster mean score of 6.16 – which is to be expected during turbulence. In other words, these skills gain in emphasis in a turbulent business environment. Similarly, skills that help seizing opportunities are highly emphasised, with a cluster mean score of 6.01. This may relate to the fact that the survey was conducted just after the GFC and at a time when managers needed to implement the actions they had identified. The third group of skills that is required to maintain competitiveness was the least emphasised but, again, this corresponds well with the timing of the survey. In essence, the survey has captured times of turbulence rather well, but what is more interesting, it supports Teece’s (2007) model and thus, links SCM skills to DCM, and to agility overall. 8. Discussion, Conclusions and Areas of Further Research The aim of this paper was to investigate the skills required for managing a supply chain in an Australian context and against the background of a turbulent business environment. Two core findings are of particular note: the confirmation, in a non-European context, of the list and also the grouping of SCM skills in the extant literature, and their ranking for managing supply chains. The most interesting observation, however, concerns the paucity of functional logistics skills among the list of significant skills during turbulent times. Instead, the focus shifts to relational skills, and to the relational capability of SCM overall, alongside interpersonal skills, problemsolving, and other general management skills. Thus, in short, general problem-solving and relational capabilities (mostly SRM that is ranked third) are more important for managing turbulence than are functional skills such as inventory management, warehousing, transportation management etc. This both confirms Mangan and Christopher’s (2005, p.180) view of supply chain managers seeing themselves as “managers first and logisticians second” as well as the importance of more strategic aspects of SCM for riding the high seas of turbulence. In terms of the generalisability of the study, a number of observations are made. Firstly, as indicated above, the empirical results from the survey described in this paper are broadly similar to, and hence confirm, the earlier work of Mangan and Christopher (2005) and the more recent work of Sohal (2013), which was also in an Australian context. A preliminary contribution of this research is, thus, a much needed consolidation and extension of the SCM skills literature. We suggest, therefore, that as a working hypothesis a similar level of importance would be found were a comparative study to be undertaken in other developed, and possibly developing, countries. This assertion is made by considering the core challenges of supply chain management that are implicit in the Stock and Boyer (2009, p. 706) definition of SCM that underpins this research. Core to this definition is the opening clause that “SCM is the management of a network of relationships...”, a theme that is even more clearly laid out by the definition of SCM offered by Christopher (2011, p.3) who suggests that it is “[t]he management of upstream and downstream relationships with suppliers and customers to deliver superior customer value at less cost to the supply chain as a whole.” Furthermore, Christopher goes on to suggest that “… equally the word ‘chain’ should be replaced by ‘network’ since there will normally be multiple suppliers and, indeed, suppliers to suppliers, as well as multiple customers and customers’ customers to be included in the total system.” (Christopher, 2011, p.3; emphasis in original). Given that supply chains are now global concerns what we assert here is that the skills required by a supply chain manager in the Australian context – to sense and respond to a change in supply or demand – will be the same as those in a European context, and will also very likely be the same in other parts of the world. By the same token, turbulent economic conditions are global phenomena and few, if any, national contexts or supply chains will not feel the impact of events such as the GFC. Given that turbulence is persistent and pervasive, it is argued that the skills required to respond to it, in all its forms, will be very similar if not the same in all contexts. Nevertheless, further research in other global regions should be undertaken in order to provide further warrantability to these findings and test this assumption. Thus, the management of supply chains (or networks) must be founded on relationships across both internal and external networks. This is why our research strongly indicates that the skills perceived to be most important by practitioners are centred on those activities that are essential to such a role, namely: leadership; problem solving; SRM; negotiation; personnel management; listening; problem identification; problem analysis; CRM; information sharing and oral communication. The importance of such skills would also seem to touch on a point of differentiation for SCM from other business disciplines, as SCM, almost by definition, cuts across vertical fiefdoms within an organisation and across organisational and national boundaries. SCM is conceptually both driven by, and a driver of, interdisciplinarity, boundary-spanning, and globalisation. Thus, from the perspective of the survey respondents, there is clear advantage to be gained from employing managers who can deliver the cross-cutting approach implicit in SCM and who are able to challenge the siloed tendencies of those working in a particular organisational division or national/cultural context. It is also relevant to note that the results of the above research broadly mirror more recent work by Wong et al (2014) who analysed job advertisements for Logistics and Supply Chain Management (LSCM) staff. Their research “…demonstrates that the job market needs graduates with more general business and management knowledge and leaderships skills, over LSCM subject knowledge.” (pp. 547-548). Whilst this work was not specifically positioned in relation to a turbulent business environment, Christopher and Holweg (2012)’s SCVI was based in a UK context and demonstrated the turbulent nature of the business environment in that country and the timing of their research mirrors that of Wong et al (2014) whose data gathering was undertaken in 2011-2012. To that extent, therefore, the two independent sets of research (that of Wong et al., 2014, and that described and analysed in this paper) are clearly offering a broadly similar perspective and conclusions. Grouping the resultant skills from the survey in line with Teece’s (2007) sense and respond model helped us to establish a link between SCM skills and agility. Sensing and responding to turbulent economic conditions – the first two groups of skills – are clearly aligned with more general management skills, whereas functional skills are used to maintain competitive advantage. We therefore conclude that supply chain managers are in need of those broader, generalist skills in order for them to be able to lead their supply chains through turbulent times. This does not, however, take away from the importance of functional skills and those who possess them as, selfevidently, generalist managers must work closely with their functionalist colleagues. Rather, we conclude that there is a shift in emphasis between those skills required during turbulent times (and for which agility is key) to the functional skills that may best contribute to efficiency and leanness in less turbulent times. Hence, in relation to the T-shaped model, we propose that the generalists and functionalists require distinctly different managerial skill sets – put simply, it would be rare to find an individual with the breadth and depth of skills required to singlehandedly run a global supply chain. Both cohorts are needed and both must work closely together in the long run, although we would argue that, in light of the increasing impact of turbulence and the associated requirement for supply chain agility, the skills of the former will be of increasing importance in the future. Thus, our primary contribution is to distinguish between the generalist and functionalist relative to the business conditions faced. In making this distinction and highlighting the importance of the generalist SCM skills set, our research uncovers the criticality of individuals who can sense and respond to changing business conditions. Liaising regularly with other generalists across the global supply network and with functionalists within their organisation, they can monitor trend and forecast data to sense change and lead effective decisions to respond before a significant impact is felt. What is equally interesting is the spatiality, temporality and economic impact of their control, which our research implies. Spatially, the span of a generalist supply chain manager’s responsibilities frequently crosses conventional organisational boundaries – for example, one minute they might be in a local team meeting to resolve a conveyor belt fault; the next, they are on the phone to a colleague at the other end of the network to reconcile a shipping delay (c.f. Butcher, 2007). Temporally, situations such as this require quick response; the timeliness of their decisions is the key. Whilst economically, the quality of their (quick) decisions is paramount – the cost of an ineffective decision, and the value of an effective one can affect the bottom line of not only their own organisation, but also those of their supply chain partners. Generalist supply chain managers are, thus, critical to overall supply chain effectiveness and efficiency. A further clear implication of this research, together with that of Mangan and Christopher’s (2005), Christopher (2013), Sohal (2013), and Wong et al. (2014), relates to the design of tertiary and executive education programmes. It is argued that, in addition to the need for functionalist educational programmes in sub-disciplines of SCM such as procurement and logistics, there is a need for generalist, MBA-type programmes that prepare SC managers for the spatial, temporal and economic challenges they will inevitably, and as would argue, increasingly face. Hence our proposition is that there is a need for two streams of higher education to emerge from the current undergraduate, postgraduate and executive programmes that are available. The first of these would focus on educating the functionalists in the specialist skills of their chosen sub-discipline, whilst the second would focus on equipping the generalists with the skills needed to work with their functionalist colleagues across conventional boundaries and yet have the capability to, in quick time, take the lead in key decisions when the unexpected happens. In addition, our findings support Fabbes-Costes and Jahre’s (2008) call for further research on the elusive link between SC integration and effectiveness. Interestingly, Sinkovics and Roath (2004) were able to assert a relationship between supply chain collaboration and market performance, but not between supply chain collaboration and supply chain performance. Establishing which skills are needed for SCM in times of turbulence is, therefore, but a first step towards a potential improvement in performance. As with all prior studies of the skills and capabilities required in supply chain, logistics and procurement management, our emphasis has been on the development of individual human capital. Yet with our identification of an increasing emphasis on relational capabilities, we can infer that groups and teams, rather than individuals, manage contemporary supply chain issues. Hence we suggest that one focus of further research be extended to the identification and enhancement of SCM social capital. Where human capital is derived from an individual’s investment in themselves to increase their worth, social capital is an individual or group investment in social relations to gain returns (Lin, 2001). In this respect, our research would appear to suggest that the ability of a supply chain manager to connect with others who can quickly and accurately help him/her address a given issue should therefore be of significant value to their supply chain, particularly in turbulent business conditions. More broadly, the results of this research offer a number of additional areas that would appear to merit further consideration. The first is that of firm size. Following on from the earlier discussion of the cross-cutting nature of SCM and, hence, the challenge of achieving goalorientated pan-network management, it follows that larger organisations would face a larger challenge and, hence, value the inter-personal and problem solving skills to an even greater extent. By the same token, there may well be a differentiation that can be observed between industries that reflects the complexity of their supply networks. For example, in an Australian context, some of the extractive industries (coal, iron ore, gas) whilst operating on an extremely large scale actually lead to a supply network that is not overly complex. On the other hand, manufacturing industries that rely on multiple components and have multiple outlets exhibit greater complexity. It would follow, therefore, that a comparative survey that spans a range of industries should also demonstrate differential levels of importance for the skills sets described above. It is clear from our findings that the role of the contemporary supply chain manager is vast and complex and thus, besides the practical implications of our proposition that SCM education should be tailored to meet the differential needs of the functionalist and generalist streams, our research has a final core research implication: do we really know what generalist supply chain managers do day-to-day? All of the literature would support the perspective of Butcher (2007) which positions such managers as the linchpins of an organisation that, perforce, operates in a global supply chain which is, at the same time, becoming ever more challenging to manage successfully. 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APPENDIX B The aims and objectives of The Chartered Institute of Logistics and Transport, Australia (CILTA) and the Logistics Association of Australia (LAA) 1. The principle objective of CILTA is to Promote and Encourage the Art and Science of Logistics and Transport. It provides leadership in research, policy and professional development and support continuous improvement in the industry. (Source: http://www.cilta.com.au/index.cfm?MenuID=39) 2. The mission of the LAA is to provide a voice for every logistics professional, practitioner and student throughout Australia. Its vision is to serve the logistics and supply chain profession by facilitating the exchange of knowledge and experience. (Source: http://www.laa.asn.au/vision.htm)
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