5 Drivers of Supply Chain Complexity in the Life Sciences Industry

Published March 31st, 2014 by Trevor Miles @milesahead 0 Comments

I’ve attended several Life Sciences events recently (including Biomanufacturing Summit) and it’s quite clear that these supply chain teams are working in a new, complex world. Not only do they need to meet diverse customer expectations, but they need to do so while coordinating an extended supply chain, in an environment that is constantly changing. Additionally, they’re faced with a set of five industry trends that are driving complexity even further.

1.       Exceedingly Distinct Markets

Through accidents of history and industrial capabilities, the Life Sciences industry has developed to satisfy principally the diseases of the affluent West, such as cardiovascular disease, diabetes, respiratory disease, and obesity, while paying less attention to the diseases prevalent in the developing world, such as malnutrition, malaria, HIV/AIDS, and TB. This has led to a drug market segmented by geography and demographics, with companies in the emerging markets focused on satisfying the ‘local’ diseases. But in recent years, with the rapid expansion of the middle class in many emerging economies, many of the ‘Western’ diseases are increasing rapidly in the middle classes of the emerging markets – for example diabetes in India – stretching local healthcare provision while opening opportunities for expansion into these countries. While at the same time innovations by companies in emerging markets are challenging the market leadership of well-established Life Sciences companies in the West.

2.       Increased Outsourcing

With tremendous opportunities for growth in emerging markets, many manufacturers have executed aggressive globalization and outsourcing strategies, while relying increasingly on Third Party Operators (TPOs) in India and China for Active Pharmaceutical Ingredient (API) supply and subcomponents, or even the manufacturing of complete devices. Coming along with these shifts is an increase in business complexity and supply chain risks given the varying regulations across global supply chains and longer and riskier supply chains.

3.       New Regulations

With this rapid increase in the use of TPOs has come added risks to quality and of counterfeiting, leading the US Food and Drug Administration (FDA) to push for the passage of the Safety and Innovation Act (FDASIA), which focuses on the risks inherent in an increasingly global Life Sciences supply chain. Much of the public comment has been on the two user fee reauthorizations, as well as two new user fee programs, and the reauthorization for pediatric research. But buried deep in the text are provisions for supply chain validation – in both domestic and off-shore plants – and drug shortages that will have a profound impact on outsourced and global supply chains.

Stefanie Johns, Ph.D., Program Manager, Xavier Health Initiatives, commenting on conference sessions at Xavier University, states that:

“The new powers from FDASIA will level the playing field between foreign and domestic sites, enhance transparency and collaboration with foreign regulators, and shift focus “away from the border to a global safety net.” FDASIA also provides the FDA with new tools to destroy counterfeit products, misbrand products on the basis of inspection refusal, and deliver criminal penalties for intentional adulteration. In order to streamline resources, the FDA will be moving towards a risk-based inspection system and will work with foreign regulatory counterparts.”

In summary, the impact of FDASIA on the Life Sciences supply chain will come from provisions for:

  • reporting of drug shortage issues, and the penalties associated with not informing the FDA;
  • and more active inspections of production facilities, including sites in other countries, including those belonging to Third Party Operators.

 

Outsourcing in the Pharmaceutical Industry

phamacutical supply chain graph #1Source: Frost and Sullivan Global Bio-Pharma CMO Market Report,“ May 2010

 

4. Shift in Treatment Focus

One side effect of FDASIA is the fast-tracking of approval for treatments that address an ever narrower spectrum of diseases. Of particular importance to rare disease patients, and likely to help encourage further investment, is the Breakthrough Therapies Act addressing the need to provide expedited development and evaluation of potential therapies that show promise early in the research process; and the Therapeutics for Rare and Neglected Diseases which aims to encourage and speed up the development of new drugs for rare and neglected diseases.

Included in the Breakthrough Therapies Act is a voucher system that allows companies developing rare pediatric diseases to obtain a transferable voucher which they can use for the expedited approval of another treatment, whether that treatment satisfies the requirements for priority review or not.

The trend to ever more targeted products is widespread across most industries whether Life Sciences, High-Tech/Electronics, or Consumer Goods. In the past, the limited markets coupled with the fact that many of the patients were in less affluent areas of the world, were a disincentive to major Life Sciences companies that were addressing a large set of diseases with broad spectrum therapeutics. However, with many of the major disease categories covered effectively by existing treatments, combined with the fact that a) many treatments are reaching the end of their patent protection period, b) growing competition from generics, and c) increasing scrutiny from regulatory bodies have all led to a rapid shift in focus of research, as well as mergers and acquisition activity toward rare diseases. (While there isn’t a universally accepted definition of a rare disease, the US government defines a rare disease as one afflicting fewer than 200,000 Americans, while the European Union defines a rare disease as one afflicting fewer than 1 in 2,000 people.)

 

Innovation versus Cost

phamacutical supply chain graph #2

 

A report released by the Pharmaceutical Research and Manufacturers of America (PhRMA) in 2011 emphasized the extent of this shift away from broad spectrum drug research focused on diseases with large patient bodies to narrow spectrum drugs focused on rare diseases. According to the PhRMA report there were a record 460 medicines for rare diseases either in clinical trials or awaiting FDA review at the time the report was published.

To overcome the economic barriers associated with the discovery and development of diagnostic equipment, drugs and devices to treat rare disease, big Life Sciences companies have been pursuing collaborations, acquisitions, and joint ventures, often with companies in India and China.

This search for ‘long tail’ drugs will mean that Life Sciences must also deal with increasingly complex demand patterns. They have to simultaneously deal with predictable patterns for mid-life cycle products and highly unpredictable patterns for new introductions. They typically have to manage both low volume, high mix products that require quick response for clinical trials and high volume products that require ramped production and global delivery capabilities.phamacutical supply chain graph #3

5.       Shorter Patent Protection

An aging product portfolio, along with a future of shorter patent periods in general, with limited opportunities for patent extensions (as demonstrated by the recent challenge by the Indian government of patent extensions based upon reformulation), only serves to reinforce the critical requirement for supply chain efficiency and effectiveness, in order to capitalize fully on the opportunities while they exist.

These industry trends are having a significant impact on the way supply chains must operate. And unfortunately, there is growing evidence that existing technology architectures are not satisfying the capability needs for this new, complex world. In an upcoming blog post, I’ll be looking at seven supply chain processes (including jurisdictional control, expiry management, supply and capacity planning) that require an integrated approach to overcome these complexity drivers.

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Posted in Inventory management, Milesahead, Pharma and life sciences supply chain management, Sales and operations planning (S&OP), Supply chain management


March Networks: The World of High-Tech Security – Kinaxis & SupplyChainBrain Series

Published March 28th, 2014 by Melissa Clow 0 Comments

SupplyChainBrain attended our annual Kinexions user conference, and while there, they completed a number of video interviews with customers, analysts, and Kinaxis executives. And, we’d like to share them!

In this interview, hear Sue Montgomery, senior business analyst with March Networks, speak about the challenges her company faces in gaining full visibility of supply and demand, and in dealing with increasing supply-chain volatility. March needed visibility on a global basis, in order to reach manufacturing and configuration facilities in China, Australia, Mexico, the U.K. and U.S. Vendor purchases depend on a forecast that was difficult to put together. In addition, the company needed to monitor all of its vendor-consigned inventory.

March’s automated system, obtained from Kinaxis, keeps a close eye on purchasing patterns, making sure that buyers adhere to contracts with preferred vendors. It really helps us to monitor and make sure that [contract manufacturers] are buying our contracts at the right price and right time, Montgomery says. Other benefits of the application include better management of inventory, and a reduction in excess or obsolete materials.

Previously, we featured interviews with:

 

March Networks: The World of High-Tech Security – Interview summary

Sue Montgomery, March Networks was interviewed by SupplyChainBrainMarch Networks is a provider of video surveillance equipment. Its products can be found in the retail and banking sectors, as well as on buses and trains. All production is done by contract manufacturers, says Montgomery.

The company’s priority was obtaining a consolidated view of supply and demand. When Montgomery joined March Networks, it had three business units with separate enterprise resource planning systems, obtained through acquisition. Getting access to key information could take a couple of weeks, due to manual processes and the use of spreadsheets. The result was a serious data backlog.

March needed visibility on a global basis, in order to reach manufacturing and configuration facilities in China, Australia, Mexico, the U.K. and U.S. Vendor purchases depend on a forecast that was difficult to put together. In addition, the company needed to monitor all of its vendor-consigned inventory.

March’s automated system, obtained from Kinaxis, keeps a close eye on purchasing patterns, making sure that buyers adhere to contracts with preferred vendors. RapidResponse really helps us to monitor and make sure that [contract manufacturers] are buying to our contracts at the right price and right time, Montgomery says. Other benefits of the application include better management of inventory, and a reduction in excess or obsolete materials.

March’s priority on the supply-chain side is keeping costs down. They are doing effective cost management, and working closely with our R&D group to make sure they’re designing with cost-effective components, says Montgomery.

Posted in Sales and operations planning (S&OP), Supply chain collaboration, Supply chain management


The Innovator’s Dilemma: How Does it Apply to Supply Chain?

Published March 26th, 2014 by CJ Wehlage 2 Comments

It has been said that the business book that most influenced Steve Jobs was ‘The Innovator’s Dilemma’. Considering the success Jobs experienced in his lifetime, I’m intrigued as to what he learned from it. We all know Jobs was a highly successful businessman, for example, Apple stock increased nearly 7,000% during the time Steve returned to Apple in August 1997 until passing the reins over to Tim Cook in August 2011.  It made me wonder what this book means to the supply chain business. So I decided to read ‘The Innovator’s Dilemma’. But when I read it, I inserted the word “Supply Chain” where “Product” was mentioned.

I’d like to share some insights I gleaned from the book:

Clayton Christensen, author of “The Innovator’s Dilemma’ said,

“The reason why successful companies fail is they invest in things that provide the most immediate and tangible evidence of achievement.”

In ‘supply chain speak’, that means the inability to link strategy with execution.  Most of us get caught in the day–to-day challenge of running the business. For example, planners spend endless hours on finding and resolving exceptions. There’s just not enough time in the day to focus on strategy and innovation.

A very good method I have used when leading supply chain strategies, is to focus on the decisions, rather than the information.   Asking, “What margin do I need this network to have for the first three months of NPI?” is better than asking “How can we get safety stock data to match between systems?”

Why is this better?  I say because of “critical thinking”. Planning is a combination of systems and human judgment. Too many planning organizations rely only on the system output. Yet, with complexity and volatility in today’s global network, critical thinking is just as important to solve the planning challenge.

I have a saying: ‘Information isn’t Power, Informative Decisions is Power’.  Figure 1 shows a very common supply chain decision flow.

Information isn’t Power, Informative Decisions is Power

Reactive supply chains manage right to left, meaning the majority of their time is driven by the impact (low profitability, excess inventory, shortage, etc).  Predictive supply chains manage left to right, meaning they simulate the plan for desired impact, and then execute.  The majority of their time is doing critical thinking and collaborative scenarios.   All supply chains bounce between reactive and predictive.  However, a heavy focus on reactive makes a more efficient supply chain, and solves today’s issue. However, it doesn’t make for a more effective supply chain or solve forward looking issues such as profitability, total cost to serve and market share.

Another good book to read is ‘Profit Mapping’.  A quote I really like is:

“We see many instances where a company may have become more efficient when viewed through a process improvement lens, but not necessarily more effective as far as the business is concerned.”

Being more effective at operating margins and inventory turns (two very good supply chain metrics) only occurs with predictive planning and critical thinking.  And, while efficient supply chain leaders can improve their KPI’s, most industries find it difficult to sustain that improvement. See the research table from Supply Chain Insights LLC presented at their 2013 Supply Chain Insights Global Summit.

 

 

Pretty much across the board, sustaining growth in turns and operating margin beyond three years is not likely to happen. Typically, progress stalls after two years.

The three reasons found to stall progress

1. Functional leadership

Today’s supply chain continues to focus on functional fixes, such as purchasing, logistics, etc.  With the network so complex, global, and outsourced, the greater impact is on your ability to manage the end-to-end process.   This requires not only visibility of end-to-end, but also, the ability to simulate and collaborate end-to-end.  It has less to do about your ERP system, and more to do with the entire network’s planning capabilities.

2. Complexity of systems used

Many companies have multiple systems, multiple ERP instances, and in many cases, functional systems bought for functional purposes.  Middleware is everywhere, and spreadsheets rule the day.  I’m not talking about the number of systems, because when you think about “end-to-end”, you now include all your 1st and 2nd Tier suppliers, 3PLs, distributors, etc.. Face it, there are a lot of systems.  I’m talking about the justification of the landscape.   It’s difficult to justify a functional system for an end-to-end process.

3.       Lack of a supply chain strategy

Lack of a supply chain strategyI’ve seen many supply chain leaders, while working on a supply chain strategy, get caught in the idea that data needs to be cleaned before innovation.   Don’t get me wrong, clean data is a good thing. But, how you go about getting there is the innovation.  Rather than spending countless hours of data cleanup, look at your most critical end-to-end processes, ask what knowledge is needed to plan and execute, and pareto the data needed to execute and fix.

 

The Roadmap to Sustainable Progress

Clayton has a statement in ‘The Innovator’s Dilemma’, “great managers…must first understand what has caused those circumstances and what forces will affect the feasibility of their solutions.”  I believe there are three core steps a supply chain can take to achieve end-to-end control.

Step 1: Collect end-to-end data, and the policies that drive the data

  • Data is good, but the policies that drive the data, especially when considering the time/events that drove the rules, like beginning of the month, last quarter, etc.
  • With the end-to-end data, set control limits to the policies.  When an issue arises, effective alerts go off, keeping the planners focused on core priorities

Step 2: Improve planning by launching what-if capabilities

  • With end-to-end data, you will have exposed the bad data.  Start your first simulations around what policies are most impacted with that bad data.  This will drive the pareto of what data absolutely needs to be fixed.
  • Yesterday vs today: run what if scenarios that tell you each morning what has changed from yesterday, and what are the most critical actions for today.
  • Informative decisions: simulate what it would take for higher profit, better turns, less excess inventory, better COGS, etc…

Step 3: Segment your end-to-end priorities

  • Segment your products and customers. Simulate various supply chain policies against those segments.  Test the attributes that make up each segment

Great supply chains need to align a strategy with the execution.  Putting an intense focus on simulation in Planning allows you to prepare in advance of the impacts.  And that’s summarized well in the book Profit Mapping:

“a wise manager knows that success only comes with operational excellence that is properly aligned with strategy.  The challenge is knowing what actions to take and when to take them – navigating without knowing the impact of your actions on the bottom line is a risk you can’t afford to take.”

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Posted in Demand management, Sales and operations planning (S&OP), Supply chain management


On the road again! LogiPharma Europe – April 8-9, 2014

Published March 25th, 2014 by Alissa Hurley 0 Comments
_Trevor Miles

Trevor Miles, vice president of thought leadership and industry principle, life sciences

We’re excited to be participating in LogiPharma Europe 2014 in Basel, Switzerland!

This year’s conference is focused on Supply Chain as a Customer Centric Function.

Join us for a roundtable discussion on April 8th on how to leverage the cloud to achieve true innovation in supply chain management. And, on April 9th, Trevor Miles is leading a session entitled Continuous S&OP – Breaking the Mold. In this session, he will discuss how business and technology has changed tremendously in the thirty years since S&OP was first defined, enabling much more proficient and integrated S&OP processes. Trevor will describe how companies are breaking the traditional S&OP mold from both a process and technology perspective.

During the conference follow hashtag #LogiPharma  and stop by the Kinaxis booth #21 to meet with the team and learn more about how Kinaxis has helped life science companies adopt process improvements and technology targeted at removing business “silos,” improving collaboration, and achieving significant operations performance breakthroughs. Find out more about RapidResponse for life sciences at: http://kinax.is/pharm.

More about the conference:
LogiPharma is the ONLY VP-level, end-to-end supply chain event for life science professionals, focusing on strategic and tactical improvements for Europe & the rest of the world. It caters to professionals from across the spectrum of innovative pharma, generics, animal health as well as bio tech companies, tackling the most relevant, pressing challenges and opportunities present in the industry

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Posted in General News, Milesahead, Pharma and life sciences supply chain management, Sales and operations planning (S&OP), Supply chain collaboration, Supply chain management


Forecast in Bonn is Sunny: Positive Outlook from Automotive Logistics Europe

Published March 18th, 2014 by Melissa Clow 0 Comments

While I was traveling to Bonn, Germany for Automotive Logistics Europe, I decided to look up the conference hashtag #ALEurope. The first thing I saw was the following snowy scene from last year’s conference:

As a Canadian trying to escape the snow, I was extremely excited to see the sun when I landed. The conference kicked off just as well. The keynote was presented by Andrea Eck, General Manager Outbound Logistics, Volkswagen and followed by Michael Gartside, Senior Automotive Analyst, PwC.

We heard from Gartside that 2013 marked the sixth consecutive year of a decline in vehicles sales in Europe. Like the weather though, this year’s economic situation is looking brighter than last year’s – things are looking up for 2014 and beyond. He presented that there is a return to growth in many EU countries, vehicle sales and production are rising in Europe, and present forecasts predict increases over the next decade.

To illustrate, from a climate perspective, just how different things were, here’s a picture I took during a conference break:

Another interesting aspect of the conference was a live survey the organizers prepared. The question that resonated with me was: “What would make the biggest difference to improving automotive logistics in Europe?

The top answer from voters called for better ‘IT systems and software‘ for improving automotive logistics. As a company that delivers S&OP and supply chain solutions for large enterprises, this response definitely peaked my interest.

Service Parts Supply Chains are Gaining Importance To address some of the challenges facing automotive supply chains, my colleague Aamer Rehman presented “Aftersales & Service Parts: Serving the customer and the supply chain” …to speak about using technology to help solve complex supply chain issues.

He believes that service parts supply chains are gaining importance and that a fundamental change is required in supply chain management.  OEMs and suppliers need global visibility in order to align and synchronize multi-tiered supply chains for fast responses to demand and supply changes, and to make intelligent tradeoff decisions based on real insights.

In Rehman’s opinion, the automotive sector needs significant improvement in some critical enterprise competencies:

  • Improving visibility, alignment and synchronization across functions, and more importantly across the supply chain, and with a focus on customer service.  This is critical given gradual reduction in vehicle inventory in the channel and working capital reduction pressure across all supply chain stakeholders.
  • Supply risk management – where companies need to develop core capabilities to detect supply and capacity problems, assess the impact, come up with business tradeoffs and publish the change.
  • Speed and accuracy of decision making is critical.  In this case, automotive companies need to focus on capacity planning and capacity constraint management disciplines and processes in order to remove unnecessary latency and lack of visibility across the value chain.
  • Collaboration across stakeholders – collaboration is not merely passing data between partners.  It is about context and content specific collaboration to understand who is impacted by a change and mutually resolve it inside and outside the enterprise.
  • Companies need to eliminate information latency between strategic, tactical and execution windows and eliminate the artificial boundaries.  For example, a static monthly S&OP reporting cadence is not sufficient.  Tying it to weekly and daily execution is critical.  A seamless flow through planning time frames is possible only if companies diligently work towards removing the patchwork of applications and Excel.  S&OP, capacity planning, constraint management and inventory management processes need to be revisited to establish discipline and alignment in decision making required for globally distributed supply chains.

For more information, you can check out his presentation slides below.

You can also see some of photos from the Automotive Logistics conference on our Facebook page.

Enjoy!

 

 

Posted in Miscellanea


How First Solar Keeps Pace With Demand – Kinaxis & SupplyChainBrain Series

Published March 17th, 2014 by Melissa Clow 0 Comments

SupplyChainBrain attended our annual Kinexions user conference, and while there, they completed a number of video interviews with customers, analysts, and Kinaxis executives. And, we’d like to share them!

In this interview, hear Jennifer Bell, systems analyst with First Solar, talk about the challenges her company faces in gaining full visibility of supply and demand, and in dealing with increasing supply-chain volatility. Recently the company implemented capability for integrated project management, to bring itself closer to customers and their purchasing patterns. First Solar is now able to drive both planning and construction of its arrays deep into the supply chain. RapidResponse is helping to forecast better, and respond more quickly to plan variances.

 

How First Solar Keeps Pace With Demand – Interview summary

How First Solar Keeps Pace With DemandFirst Solar is a manufacturer of solar panels. It also provides engineering, procurement, construction and operations services for the building of large solar arrays. The company positions itself as a low-cost provider in its industry, says Bell.

Among its pain points is the need to balance supply and demand. Recently the company implemented capability for integrated project management, to bring itself closer to customers and their purchasing patterns. First Solar is now able to drive both planning and construction of its arrays deep into the supply chain. RapidResponse is helping it to forecast better, and respond more quickly to plan variances, Bell says.

Jennifer Bell First Solar Supply Chain - How First Solar Keeps Pace With DemandThe effort to improve planning was triggered by a sharp downturn in the solar materials industry. Toward the middle of 2012, First Solar began experiencing increasing cost pressures, with prices being driven down by competitors.

At the time, it was selling modules exclusively to distributors, mostly in Europe. But the pressure on margins drove it to expand into the engineering and construction sector. And that move, says Bell, led us to see that planning was an integral part of our business. It needed a better means of forecasting demand, so that it could create value for our customers.

First Solar faces a significant amount of market volatility, both as a supplier and technology implementer. Construction projects can be affected by a wide variety of factors that are beyond the company’s control, such as weather, soil variability and unforeseen environmental impacts.

It means we have to be able to respond very quickly, says Bell. We need to be able to plan that in the project. Critical decisions must be made in far less time than before, as the company hits the various revenue milestones that are built into its projects. If we don’t meet plan, Bell says, we have huge ramifications for our customers.

 

Previously, we featured interviews with:

 

Posted in Miscellanea


Kinaxis Positioned in the Leaders Quadrant of Gartner’s Magic Quadrant for Supply Chain Planning System of Record

Published March 10th, 2014 by Lori Smith 0 Comments

Gartner recently published their Magic Quadrant for Supply Chain Planning System of Record and we take great pride in the fact that Kinaxis has been placed in the Leaders quadrant.

We’ve worked hard over many years to differentiate and distinguish ourselves in the marketplace, so this third-party view is particularly validating for us. 

Gartner-magic-quadrant-supply-chain-planning-system-of-recrod-march-2014.jpgAccess full Magic Quadrant Report

Gartner defines a supply chain planning (SCP) System of Record (SOR) as:

An SCP SOR is a planning platform that enables a company to create, manage, link, align, collaborate and share its planning data across a supply chain — from demand plan creation through the supply-side response, and from detailed operational planning through tactical-level planning.1

In this regard, we believe we truly do stand apart from other vendors in the space.

The report positions vendors based on completeness of vision in the supply chain planning system of record market and on their ability to execute to that vision.

So that begs the question…“What’s our vision of a supply chain planning system of record?

Ultimately, we believe that a supply chain planning system of record should be focused on how it can drive tangible business outcomes not just on how to run the supply chain planning function. Value is only derived when technology enables clear and compelling business results.  We believe that can only happen if you are orchestrating the supply chain from a single system.  With a supply chain planning system of record, companies should achieve:

  • multi-tier, multi-enterprise supply chain visibility, planning, analysis, and collaboration,
  • integrated demand and supply planning – at an aggregate and detailed level;
  • active monitoring of current and projected business results from a user-defined perspective;
  • rapid what-if analysis and scenario comparison to model unlimited alternatives and evaluate their impacts across multiple functions; and
  • continuous orchestration of business activities and coordinated course corrections that optimize overall corporate performance and profitability.

Find out more about End-to-End Supply Chain Process Enablement with RapidResponse, and the outcomes Kinaxis customers have realized.

Supply Chain Planning and S&OP Process Chart

1 Gartner, Magic Quadrant for Supply Chain Planning System of Record, T. Payne, March 6, 2014

Disclaimer: Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings. Gartner research publications consist of the opinions of Gartner’s research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.

Posted in Miscellanea


The Gender Divide in Supply Chain – 3 Questions That May Show We Are Looking at the Wrong Issue

Published March 5th, 2014 by Trevor Miles @milesahead 3 Comments

I like to think of myself as a champion for women in all walks of life. And in terms of the supply chain, I believe there are female characteristics that we can and should leverage a lot more, specifically their more collaborative and consensual approach to solving problems. Of course I understand that these are generalizations. Prejudice is devaluing characteristics particular to one group, and assuming that a particular member of a group conforms to the broad generalizations about that group. I hope I do neither.The Gender Divide in Supply Chain

Why do I write about this topic now? Well, it is International Women’s Day for one, but it is also a topic I have written about before when commenting on the HSBC ‘Thank Heaven for Little Girls’ campaign and on a panel about women in supply chain at a John Gattorna conference in Singapore.

Here are some links to other resources for International Women’s Day:

If we understood and valued more the right skills needed in today’s environment, would that naturally translate to more women in the supply chain?

In addition, we sponsored a day during the recent SCM World Live conference devoted to the topic of women in the supply chain. Kevin O’Marah wrote a summary of the day titled ‘Women in supply chain: a bias for action’ in which he comments that his key take-aways from the day were the need for:

  • Quotas
  • Systemic support
  • Structural support
  • Advocacy
  • Fill the front end of the pipeline
  • Look laterally for talentgender divide in supply chain infographic
As you can imagine, this list generated quite a lot of debate, particularly the questions of quotas. Christina De Luca, VP of Procurement and Supply Chain for BP, was very articulate in stating that the quotas of the 1970s, when she started working, were wrong in that all they looked at was filling a certain number of positions with women. In Christina’s view the characteristics that we look for and the criteria we use to select people has to change because these have been skewed towards men. Her view, with which I agree, is that, when compared with the 1970s, or even the 1990s, business is now operating in a much more volatile world. And it’s not going to change. To quote her from the session:

That predictable, stable world which allowed us to make decisions in isolation, hierarchically, is gone.

It requires a way of working, a skill set that is completely different. We need to talk with and collaborate with colleagues and competitors.

I agree whole heartedly. As Kevin Shriver of Land O’Lakes said on a panel, if more than 50% of the population is women and less than 20% of the people in senior supply chain positions are women, then by default we cannot be hiring the most talented people.  This gets us back to the issue of the characteristics that we look for and the criteria we use to select people.

By a show of hands in the room at the SCM World Live event, a very clear majority of the women, which by definition are women who have risen to high positions in a company, had husbands who had stayed at home with the children so that these women could devote the time to climb the corporate ladder.   On a personal note, my wife and I made a more traditional decision, so, given that I am married to a very bright and capable woman, I am more concerned by the reintroduction of women into the workforce after an absence for child rearing, be that 1 year or 18 years. I asked a few women sitting around me about this and they all placed the onus on the women to explain their absence from the work force and articulate the transferable skills gained from their time at home. I disagree. What is required is for HR departments to value the multi-tasking, agenda setting, rapid trade-off analysis, and appeasement skills that are inherent in raising kids and running a household.

Are we labeling by gender when we should be defining by characteristics?

The question is if there is genuinely a difference between men and women. I think it is best to use an approach that focuses on the characteristics desired rather than to label these characteristics particular to women or men. Having said that, I have always been fascinated by the work of Geert Hofstede on ‘cultural dimensions’ dating from the 1970s, but continue even today. His work has its own detractors and adherents, but what I find interesting is his comparison of different ‘cultural dimensions’ across countries, the dimensions being:

Power distance index (PDI): “Power distance is the extent to which the less powerful members of organizations and institutions (like the family) accept and expect that power is distributed unequally.” Cultures that endorse low power distance expect and accept power relations that are more consultative or democratic.

Individualism (IDV): “The degree to which individuals are integrated into groups”. In individualistic societies, the stress is put on personal achievements and individual rights. People are expected to stand up for themselves and their immediate family, and to choose their own affiliations. In contrast, in collectivist societies, individuals act predominantly as members of a lifelong and cohesive group or organization (note: “The word collectivism in this sense has no political meaning: it refers to the group, not to the state”). People have large extended families, which are used as a protection in exchange for unquestioning loyalty.

Uncertainty avoidance index (UAI): “a society’s tolerance for uncertainty and ambiguity”. It reflects the extent to which members of a society attempt to cope with anxiety by minimizing uncertainty. People in cultures with high uncertainty avoidance tend to be more emotional. They try to minimize the occurrence of unknown and unusual circumstances and to proceed with careful changes step by step planning and by implementing rules, laws and regulations. In contrast, low uncertainty avoidance cultures accept and feel comfortable in unstructured situations or changeable environments and try to have as few rules as possible. People in these cultures tend to be more pragmatic, they are more tolerant of change.

Masculinity (MAS): “The distribution of emotional roles between the genders”. Masculine cultures’ values are competitiveness, assertiveness, materialism, ambition and power, whereas feminine cultures place more value on relationships and quality of life. In masculine cultures, the differences between gender roles are more dramatic and less fluid than in feminine cultures where men and women have the same values emphasizing modesty and caring. As a result of the taboo on sexuality in many cultures, particularly masculine ones, and because of the obvious gender generalizations implied by Hofstede’s terminology, this dimension is often renamed by users of Hofstede’s work, e.g. to Quantity of Life vs. Quality of Life.

Long-term orientation (LTO): First called “Confucian dynamism”, it describes societies’ time horizon. Long term oriented societies attach more importance to the future. They foster pragmatic values oriented towards rewards, including persistence, saving and capacity for adaptation. In short term oriented societies, values promoted are related to the past and the present, including steadiness, respect for tradition, preservation of one’s face, reciprocation and fulfilling social obligations.

Indulgence versus restraint (IVR): The extent to which member in society try to control their desires and impulses. Whereas indulgent societies have a tendency to allow relatively free gratification of basic and natural human desires related to enjoying life and having fun, restrained societies have a conviction that such gratification needs to be curbed and regulated by strict norms.

The Gender Divide in Supply Chain graph1In reality, many of these dimensions are interlinked and, for example, in many cases cultures with a high Masculinity index also have a high Power Distance Index. But the actual values are of little value if not compared to other countries/cultures.

Of course, the most obvious connection to the topic of women in supply chain is the Masculinity dimension, and, by inference, the degree of ‘femininity’ in the culture. As defined by Hofstede, Masculinity is characterized by competitiveness, assertiveness, materialism, ambition and power, which, in my opinion, is at the heart of dysfunction in the supply chain, and precisely not the characteristics described by Christina De Luca as necessary for the modern supply chain.

The Gender Divide in Supply Chain graph2 It bothers me though that Hofstede uses the term Masculine to describe only one dimension.  For example, I would rate Sweden more ‘female’ because by comparison it rates low on Power Distance and Masculinity and high on Pragmatism and Indulgence. Canada is more confusing because it rates high on Individualism, low on Pragmatism, and high on Indulgence.

Eva Wimmers, CPO of Deutsche Telekom, one of the keynote speakers at the SCM World conference used the following diagram to differentiate between female and male leaders. I like the fact that she used quotes around the terms to indicate that these are not gender stereotypes, but rather characteristics of different personality types.

supply chain trevor miles gender blog

 

As you can see, there is a strong similarity between the characteristics Eva Wimmers uses and those promoted by Hofstede, but Eva is closer to my way of thinking that it is the sum of the characteristics that determines the type.

So are quotas the right approach to redress the imbalance of women in the supply chain?

I agree with Christina Da Luca that the approach to quotas needs to be different. On the other hand, there needs to be a goal, an objective against which we can measure success. Whether we call these goals quotas is a matter of semantics.

But quotas without a change in approach is unlikely to yield substantial and sustained improvements. And it is incumbent on us men to be active in this change of approach.  This was a key point Kevin emphasized on a number of occasions during the conference.

 

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