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Wednesday, August 27, 2014

Sourcing and Supplier Management Skills Gap: What Manufacturers Need to Succeed


Credit: stockimages at

Credit: stockimages at

The skills gap within the manufacturing industry is a widely discussed topic. Shortages in skilled production positions such as machinists, machine operators, craft workers, and other disciplines are inhibiting manufacturers’ ability to expand operations, drive innovation, and improve productivity.

But there may be an even bigger skills gap facing today’s manufacturers, and it is a gap that lives in the back office. The positions of procurement, sourcing, and supply chain and supplier management have evolved significantly in recent years. The roles have become far more strategic and require a different set of skills than that of a decade ago. The specific outcomes that today’s supply professionals need to accomplish call for the following list of abilities.

Educate About Strategic Value of Sourcing
No longer can procurement, sourcing, and supply management staff simply be order-placers looking for the lowest price for particular commodities, parts, and components. They need to be able to show internal parties that they can add significant value to their projects, gathering the right supplier fact base, helping others to understand the tradeoffs and risks associated with each supplier bid, and fostering innovation.

The team’s new mission is: We’ll help you make the best decisions possible, and we’ll still get you the target savings you need.

Get Involved Early in the Sourcing Process
Adding significant value can only occur if supply practitioners get involved before all the important decisions are locked into place. This is especially true for any product design or margin enhancement initiative. Suppliers are a great source of information regarding cost cutting, material changes, and even design ideas.

Sourcing departments can help product teams leverage this wealth of supplier knowledge. Good collaboration skills are required of practitioners. Effective procurement teams knock down silos and foster teamwork.

Accelerate Sourcing Cycle Times on Many Projects
The number of sourcing events being conducted every year continues to rise dramatically, driven by increases in new product launches and margin enhancement initiatives. Today’s professionals must excel at multitasking and possess the ability to work on (and provide value for) a large number of simultaneous events. They must also be technology savvy, as better skills and processes will not improve sourcing cycle times alone. Procurement teams will need to be agile and able to be pulled in different directions without failing.

With that, it’s already time to upgrade the team mission statement: We’ll help you make the best decisions possible, and we’ll still get you the target savings you need, while also doing twice as many strategic projects.

Transform Data Into Information and Knowledge
Manufacturers are now inundated with data. Employees who can harness information and turn it into actionable knowledge will gain the advantage. Procurement executives need to look closely at the analytical skills of any potential hire. They need to be able to assess the quality and reliability of data. They need to be able to see the whole picture, synthesize data into information and knowledge, and communicate the tradeoffs associated with each decision option.

Also, they need to look for employees who can excel at talking through scenario analyses and building “what if” scenarios. Organizations don’t necessarily want to hire just data geeks. They need to hire people who can explain complex analytics in a very simple and actionable fashion.

Positively Impact the Customer Experience
The last outcome that today’s sourcing, supplier management, and supply chain professionals need to enable stands to be a significant shift in thinking for some. This critical group of employees needs to understand that they play a significant role in customer experience.

In many cases, they are a big part of building the brand. The decisions they make impact the selling price, look, and quality of the products their organizations produce. They create the value that customers perceive in the marketplace, and this must help drive their decision process. There needs to be a proliferation of “pride in manufacturing” not only on the plant floor but in the back office, as well.

Get Millennials Ready for What’s Next

It’s time for supply chain, sourcing, and procurement hiring managers — and the HR teams who support them — to position themselves to identify, attract, train, and retain the types of professionals needed for evolving roles. The majority of today’s workforce is made up of the Baby Boomer generation, who are used to functioning in very top-down organizational hierarchies, following specific instructions down a single path, and turning to hard work and long hours to overcome problems. These characteristics are not necessarily ideal for the needs and requirements of the contemporary sourcing and supply chain professional.

But change may be at hand. The earliest members of the Millennial generation have reached their 30s and are ready for a variety of positions, including leadership roles. The characteristics of Millennials seem to be much aligned with the emerging job skill set — skilled in technology, confident, and able to multitask. They prefer to work in teams and have higher expectations for excellence.

One area HR should focus on immediately is job rotation. Future leaders will need to be versed in sourcing, supply chain, product management, quality, and maybe even sales. Manufacturers should even consider developing rotation programs for entry-level employees who would like to grow with the company.

By achieving the outcomes outlined above and preparing for a new generation of skilled workers, manufacturers can close the skills gap in sourcing, supplier management, and supply chain.

READ MORE: Engaging Millennials in Manufacturing


Mcross currentMichael Cross is the senior manager of solutions marketing at Directworks, a leading provider of cloud-based sourcing and supplier management software for manufacturers. With a sole focus on the manufacturing industry, Michael dedicates significant time and energy studying how industry trends, drivers of change, and emerging market conditions impact supply chain, sourcing, and supplier management processes. Michael has generated a variety of articles, white papers, webinars, and blog posts on the topic. Michael holds a PhD from the University of Pittsburgh.  



  1. Having been in engineering and procurement I can safely say that the skills gap in the last 20 years has not been great. However I would say that procurement is probably closing it faster the engineering which is still woefully lacking. Also many engineering graduates end up in anything but engineering! We lecture at the University of the West of England and Greenwich University with the hope of teaching the MBA graduates more about the proactive strategic electronic role that purchasing is becoming today. However even with promotions such as this it is still seen as the back office role and like engineering we need more of us on the board.

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