News / Study reveals firms not keeping pace with digital supply chain development

Companies are failing to tackle the new demands of supply chain management in-house, according to a study produced by McKinsey.

From a survey of 71 global companies last year, results released last month reveal that 99% felt they needed more in-house digital supply chain talent, with only 5% of their supply chain professionals deemed well-rounded end-to-end experts.

The need for supply chain professionals that straddle traditional skills and new technology accelerated rapidly in the space of a year, rising tenfold from the need McKinsey found in its 2020 survey. Of last year’s respondents, 39% said they had little or no talent in-house, while 59% said they had some talent in their ranks.

McKinsey analysts reckon this sense of urgency is going to grow as companies’ capability requirements grow with the expansion of their digital supply chain initiatives. Moreover, McKinsey expects half of today’s tasks to be automated by 2055, “resulting in process transformations and the implicit need to re-skill and upskill workers”.

However, the pharmaceutical industry is ahead of the curve, the study shows.

“We notice an improvement in the average supply chain capabilities of pharmaceutical organisations, while the average performance of companies in advanced industries (including automotive, aerospace and defence, and semiconductors) and basic materials sectors has fallen slightly,” the authors noted.

On the bright side, employees have broadened their skill sets. In 2017, McKinsey found that 60% of supply chain professionals had expertise in at least one area; last year 30% were experts in one field while 28% claimed proficiency in two to five areas.

And, contrary to popular perception, it is not the young employees who grew up with technology that are leading digital expertise. McKinsey found the highest command of applied digital and analytics topics lay with senior management, followed by mid-level leaders.

“Although more junior employees may have the technical understanding and educational background for digital, they may lack a broad perspective on value creation from applying data science methods and advanced technologies to business problems,” the authors wrote.

Faced with a dearth of in-house expertise, firms are tempted to turn to external professionals, but McKinsey’s study indicated that external talent hired showed, on average, lower skill levels than full-time employees.

“Organisations that invest in developing their people while launching a transformational change programme see a higher success rate than those that do not,” the authors concluded.

This puts a high burden on training. While internal programmes are in place in many organisations, only one in 20 respondents found them effective. McKinsey found that 6% of the surveyed firms had developed a formalised perspective on strategic skills.

The current workload also gets in the way. Most supply chain organisations have been too busy to find time to train staff, said Helmut Berchtold, president & CEO of logistics recruitment specialist adi Consult.

And McKinsey warned: “As they aim to transform their organisation to thrive in the changing market, firms are under the gun to bring their talent pool up to speed. About 70% of transformation programmes fail, and the main reason is lack of skills among employees.”