7 Key Supply Chain Leaders’ Skills and Why We Need Them

What are the essential skills we need to possess or develop if we want to become one of tomorrow’s supply chain leaders? Is it enough to have a business-related degree and a little supply chain experience, or is supply chain leadership a vocation for which we must work hard to acquire specific qualities?

In reality, it’s probably a little bit of both. Indeed, many elements of supply chain leadership can’t effectively be learned through academic channels alone.

In any case, an excellent place to start is by knowing what the most vital supply chain leaders’ skills are and, of course, why we need them.

That’s what we’ll find in this article, so we can check which essential skills we already have, and which ones we might wish to enhance with some pragmatic supply chain education.

7 Supply Chain Leaders’ Skills We’ll Really Need are:

1. Information Technology and Automation Knowledge:

Before getting into this first section properly, I want to make one essential point, which I’ll expand on later in this article. Supply chain leadership is all about people using technology as a tool. Nothing is more important than working on our people skills if we want to be a successful supply chain leader.

Nevertheless, few supply chains run successfully today without the support of sophisticated technology tools, like warehouse management and enterprise resource planning (ERP) systems. For that reason, we need at least a modicum of IT understanding to work in a supply chain environment, particularly if we intend to hold a leadership position.

To be a supply chain leader, we will need to be familiar with the use of enterprise software applications like WMS, TMS, and ERP, not to mention analytics software, which is increasingly becoming a staple source of leadership decision support.

In IT tools leaders must get into these roles as well:

a. Enterprise IT Skills at User-level

There was a time when supply chain leaders could rely on subordinate employees to do all the hands-on work with business information systems, and be content to receive reports and Excel spreadsheets containing data for decision-making.

Those days are gone, however. Today we’re expected to find our way around the modules of our company’s ERP and business intelligence applications on our own. Furthermore, our need for technological understanding extends beyond hands-on use.

b. Understand IT as a Buyer

As a supply chain leader, our input into IT procurement will be crucial, and we must know enough about our company’s technology needs to discuss them with vendors. We’ll need to understand the relationship between ERP workflows and physical processes, for instance, to help prevent classic mistakes from being made, such as applying new technology to outdated, inefficient processes.

It will help if we know automation technology, too, since more and more companies are applying automation in distribution centers and warehouses.

Ultimately, strong interpersonal skills still trump technological expertise as a supply chain leader’s forte. However, a career at the head of our company’s supply chain is not one to consider if we don’t have some affinity for technology and its application in business.

2. A Grasp of Economics and Market Dynamics:

The supply chain world is changing rapidly and sometimes unpredictably, in line with the market dynamics across many industries, all of which are being affected by rapid shifts in customer and consumer buying-behavior.

Many markets that used to be purely local or regional have become global, as have the supply chains that serve them. As a supply chain leader, we will need to focus on what lies ahead and, to some extent, predict it. That can only be possible with a thorough understanding of the market dynamics relating to our industry and our company.

Of course, each industry and the niches within them are subject to unique and specific market dynamics. Supply chain leaders can work in any industry as long as they know their stuff, but this does mean that a change of employer can require some in-depth study, especially if the market is unfamiliar.

To see ahead and lead a supply chain team effectively, we’ll need to understand what drives demand, supply, and pricing for the goods and services provided by our organization and its competitors. These forces impact a variety of supply chain management elements, including the cost of goods sold and the cost to serve our company’s customers.

3. Understanding Cost-to-serve:

Supply chain leaders play a very active role in the profitability of their employing companies. If we’re running a supply chain operation, our decisions impact the costs involved in supplying our organization's customers.

We will have a huge advantage and the potential to shine as a leader if we can quantify how our supply chain leadership decisions affect our bottom line. For instance, too few companies focus on the real costs involved with serving customers.

The result of this inattention is often a one-size-fits-all approach to service, inevitably leading to the over-servicing of some customers and the under-servicing of others. A single service offering can even impair profitability, perhaps creating a situation where logistics costs cause some sales to generate losses instead of profits.

By developing a thorough cost-to-serve understanding, we’ll even be able to make decisions that improve the profitability of those customers and products instead of taking knee-jerk measures to cut losses.

Every company wants supply chain leaders who can make direct and positive impacts on the bottom line—but not every company has such leaders. That’s why familiarity with cost-to-serve is one skill that can help we stand out as a competent supply chain professional.

4. The Skill of Flexibility:

The one thing we won’t find on this list of supply chain leaders’ “must-have” skills is innovation. We don’t have to be an innovator to be an outstanding supply chain leader, but we do have to support and drive innovation. Flexibility is the skill that will help we to do that.

Flexibility gives we the ability to let others engage in the innovative thinking. Our flexibility will give those creative thinkers the confidence to present their ideas, since they know that we will adopt them if it makes sense to do so.

Flexibility will keep we from feeling too comfortable in the status quo ever to let it go. Flexibility will ensure that change (often termed the only constant in supply chain management) will not faze we or cause we undue stress. In turn, our team will be encouraged to embrace, rather than resist, change.

Flexibility is one of the soft skills that differentiate successful supply chain leaders. That’s not only because of the changing nature of supply chain operations, but also because things don’t always go to plan—far from it if truth be told.

Don’t fall into this trap. Work on our flexibility as a leader. Accept that plans should always be work-in-progress, and adapt our approach when required. We can’t plan for every eventuality, and while flexibility is a virtue for supply chain leaders in general, it’s absolutely essential in project management.

5. Project Management Skills:

Aside from flexibility, there are many other project-management skills that we’ll need as a supply chain leader. Of course, a lot depends on what leadership role we are in, but if we are headed to the top, we’ll probably hold several management positions on the way up, most of which will see we leading projects from time to time.

If we make it to the C-suite or, indeed, to any senior leadership position, it will help we and our managers do a better job if we understand the fundamental principles, pitfalls, and challenges inherent in project management.

The most crucial project management skills to acquire as a supply chain leader are as follows:

a. The ability to negotiate successfully for resources, budgets, and schedules

b. A high degree of personal organisation

c. A proactive approach to risk management

Of course, the above-noted skills are also valuable for supply chain leaders generally, not just as part of a project-management skill set. I’ve simply noted them here because they are the carry-over skills most likely required in a supply chain leadership role. To elaborate:

Personal organisation will be vital for keeping track of numerous projects for which we are likely to be a sponsor and meeting our obligations toward them.

We may sometimes be called upon to support project business cases, hence the need for negotiation skills.

When deciding if we’ll approve a requested project, knowledge of risk management will help we ask the right questions about the proposal and business case.

6. The Ability to Get the Best from People:

So how about those people skills I briefly mentioned earlier??

I can’t put it any more plainly: the ability to lead, manage, influence, and inspire other people is the number one fundamental, essential skill that all supply chain leaders and managers should possess.

It is entirely possible to learn the necessary skills, but a word of caution is due. If we don’t enjoy team building and developing professional relationships with lots and I do mean lots of other people, don’t choose a supply chain leadership career.

On the other hand, if we love working with people but just don’t see ourself as a great leader, we probably have exactly the right mindset to succeed in a supply chain leader’s role.

There is nothing wrong with being self-critical, as long as we have the will to learn what we need to learn, and the energy to commit to our personal development. Being passionate about teamwork and enjoying interactions with others is half the battle in succeeding as a supply chain leader.

The 3 Cs of Supply Chain Leadership:

Communication: First and foremost, we need to communicate well … to articulate sometimes complex concepts in a way that anyone within our company can understand, regardless of whether they have supply chain knowledge or not.

Depending on whether our company operates internationally, we might benefit from communication skills that extend beyond our native language. It’s becoming ever more common for enterprises to give preference to bilingual or multilingual leadership candidates.

Collaboration: Secondly, we will need to be able to foster collaboration, a critical element in any modern supply chain.

It won’t always be easy, because sometimes we’ll be asking teams inside and outside of our business to collaborate and work together despite competing priorities and expectations. To ensure these parties collaborate, we’ll need to draw on communication, persuasion, and relationship building skills.

Change: Change management is another people skill in which we might wish to receive some special education or training. If we are planning to graduate from a role where we’ve been used to participating in, but not leading change efforts, experience alone may not be sufficient to help we take people through challenging changes. Resistance to change can be hard to overcome.

The impact of changes within our supply chain can affect employees on a very personal level. We’ll need to know how to empathise and to listen actively to what people are telling we. Without these skills, our leadership can quickly be rejected during periods of change, purely through fear of the unknown and a sense that we don’t appreciate employees’ concerns.

Get the Best From Ourself:

Finally, while the need to interact effectively with other people might seem obvious, we shouldn’t neglect the development of the person most impacted by our skills and abilities—ourself.

Supply chain leaders should be able to conduct regular self-assessments and identify their areas of weakness.

We never stop learning and developing, but by having the ability to self-appraise our skills honestly, and work on those areas that need it, we can acquire new expertise at a rate that keeps pace with the ever-changing supply chain environment.

Getting the best from ourself also means having the ability to curb our ego. Learn to recognize when somebody else in our team exceeds our aptitude for a specific task or responsibility.

Let that individual take the lead, and be happy to follow and learn from her. Not only will that free we to play a part in which we can use our strengths, but we’ll also be empowering the other person and helping her to reach outside of her comfort zone.

7. The Know-How to Negotiate:

As a modern supply chain leader, it won’t only be our reports and colleagues that we need to interact with effectively and skillfully, but also those outside our organization. Moreover, both internal and external interactions will often involve the need to negotiate.

Supply chain leaders must negotiate often, and even if we’re not doing so on a one-to-one basis, we’ll probably find ourself in scenarios where we’re part of a team of people trying to broker a deal or arrangement.

Negotiation Scenarios for Supply Chain Leaders:

Some examples of possible negotiation situations that we might get involved in, and in many cases, lead, include:

a. Procurement of IT services and solutions

b. Contracts for logistics services

c. Brokering deals with product vendors (for direct or indirect supplies)

d. Putting together contracts or service level agreements with customers

e. Negotiations with employee groups or trade unions

f. Business merger/acquisition negotiations

Why do Negotiation Skills Matter?

Negotiations are typically transactional, but often take place between entities or teams engaged in long-term business relationships. Whether we are the lead or a mere participant in the negotiation, our skills will influence the transaction’s outcome and the trajectory of the broader relationship.

For example, skilled negotiators know that the process does not have winners or losers. They don’t go into a negotiation aiming to win as many concessions as possible, and they don’t feel that they have failed when they have to give ground to arrive at a settlement.

A win/lose type of attitude will lead to negotiating mistakes. Even if we come out of a negotiation feeling that we have won, we might find further down the line that our “win” has done nothing to strengthen what might be a vital partnership.

Mistakes that Skilled Negotiators Avoid:

If we have developed our negotiation skills, we will always enter into discussions looking for an outcome that will satisfy both parties. We’ll also be able to avoid other common mistakes such as:

a. Failing to prepare by identifying what the deal-breakers are, which outcomes are essential, which ones are useful to achieve, and which ones don’t matter in any concrete way.

b. Asking only for as much as we expect. It is better to ask for more than we expect.

c. Modifying an offer we have made before getting a response to the original. It’s important to understand that the other party may use silence to bait we into relaxing our conditions.

d. Offering compromises before we have heard all the demands of the other party. By getting all the facts first, we can be selective in identifying where compromise may be possible.

e. Focusing too much on our party’s input and achievements. Strong negotiators pay close attention to the opposite party’s behaviour, ask plenty of questions, and take time to understand and analyse the answers.