On October 26, I was asked to be the keynote speaker by the Supply Chain Finance Community at an annual event hosted by the Rutgers Business School where I am currently the Vice Chair of the Advisory Board. I took it as an opportunity to revisit a perspective that I shared in a paper published in October 2022 in the Supply Chain Management Review. At the time I predicted that we were entering a post global pandemic era of scarcity in the supply chain, as opposed to the period of abundance we enjoyed between 2010 to 2019. This view continues to ring true as we continue to navigate a world of geopolitical unrest, climate challenges manifested in extreme weather, and stubborn inflation driven by demographic changes. Many supply chain and finance leaders today are tasked with fighting costs of inflation driven by the weaponization of supply through scarcity and renewed leverage of employees leading to wage growth. We hear of strategies in the diversification of the supply chain, commodity and labor negotiations, along with infrastructure investments. All are needed and will require investment in technology, people and practices.
These investments will take time, persistence and an elevation in competencies in areas such as employee and supplier relationships. At the time I wrote the original article I stated that:
“It’s no surprise then that CRM practices and technology tools represent the biggest software market in the world, and its growth isn’t slowing down. CRM investments supported by the evolving cloud environment are now expected to reach more than $80 billion in revenues by the year 2025. The over index on CRM has created a business environment that has commoditized the other two critical business relationships: employee relationship management (ERM) and supplier relationship management (SRM). It has taken a significant, disruptive crisis with severe impacts on critical business operations and outcomes to highlight the risky nature of this tradeoff.”
Organizations—large and small—that can quickly transform themselves into deploying a balanced strategy of customer, employee and supplier investments will win the day (and market share) in this period of scarcity, showing what is commonly known as resilience.
The SCFC Conference was an opportunity to stress the importance of deeper and more integrated processes and practices between the supply chain and finance functions that have evolved over the past few decades. Access and availability of capital is a challenge in today’s environment elevating the importance of better decisions on deployment of resources and the quality of execution. This relationship needs to view the entire enterprise as the internal customer for success and enablement, including all spend with third parties across all functions. Traditional practices like forecasting and dynamic sales and operational planning (S&OP) will require more modern tools (such as AI) with clarity on responsibilities. Functional budgets must evolve from an annual event to a real time process along with spend and supplier management governance that enables budget owner alignment to strategy and improves competencies leading to improved outcomes. The margin for error is much tighter in our new era of scarcity; our data has to be better; our competencies need to improve and our ability to collaborate both internally and externally need to be elevated. Customers and investors will demand this if organizations are to thrive in a time of uncertainty and renewed challenges. This is not a time for leaders that are “blamers and complainers”, but those with the foresight to embrace the risks of change. This is a time for the leaders who are “pioneers and collaborators” that are enabled by integrated supply chain and finance functions that deliver resilience through next generation skills, processes and technologies. As I had stated in my previous article:
“Perhaps most important, investors will require greater transparency for these practices and the board must ensure that exceptional leaders are in place that can deliver growth through excellence in supplier collaboration and enterprise-wide execution.”