8 Must Have Supply Chain Competencies

• Career Advice Continuous Improvement Supply Chain Management

The underlying Supply Chain technical competencies are skills, knowledge, and characteristics that support effective performance as a Supply Chain professional.

Given the global demands of supply chains, supply chain professionals should never stop developing new skills and enhancing existing ones. However, here are 8 core supply chain competencies that they need to master and continually improve (in no particular order!).

8 Technical Supply Chain Competencies

1.    Capacity Planning

Capacity planning ensures that needed resources (e.g., manufacturing capacity, distribution center capacity, vehicles, etc.) will be available at the right time and place to meet logistics and supply chain needs. Moreover, in other words, it focuses on determining the appropriate production levels the company can complete.

Do you want all your resources on time? You are in the right place. Kien Leong’s “Capacity Planning” will help you align resources with demand, optimize production schedules, and drive operational efficiency.

This also includes capacity planning with suppliers at all manufacturing cells and critical machines/equipment, as well as overall Equipment Effectiveness (OEE) and Sales Inventory and Operations Planning (SOP).

You Should Watch 5 Things to Consider When Doing Capacity Planning for S&OP to learn more about Capacity Planning.

2.    Demand Management

Demand management is the process of determining what customers will purchase and when, in other words, predicting demand. Moreover, good demand management uses qualitative and quantitative methods to use customer data to reduce uncertainty and predict short-term incoming demand for use as input into the Sales, Inventory, & Operations Planning (S&OP) process.

To learn In-depth about How to Run an S&OP Process – Benefits, Process Steps, & Overcome Barriers, take our course as SCMDOJO Member.

The competency includes using highly analytical techniques, Excel Spreadsheets, and maybe software to generate baseline statistical forecasts. In my view, demand management is one of the most essential Supply Chain competencies.

You can use this Demand Forecast Guide to take your Demand Management Skills to the next level.

3.    Order Processing

Out of all supply chain competencies, Order Processing is the most underrated competency. However, order processing entails the system that an organization has for getting orders from customers, checking the status of orders, communicating with customers about them, and actually filling the order and making it available for customers. Additionally, in some businesses, it also includes processes until invoicing.

Part of the order processing includes checking inventory status, customer credit, and accounts receivable in some businesses. Moreover, because the order processing cycle is a key area of customer interface with the organization, it can have a significant impact on a customer’s perception of service and, therefore, satisfaction (Shapiro, B.P. et al. 1992).

In today’s competitive landscape, efficient order management is no longer a luxury – it’s a necessity. Moreover, for supply chain professionals, ensuring smooth order fulfillment from click to delivery is crucial for customer satisfaction, business growth, and profitability. To learn more about it, read our blog!

Read More About Order Management

The knowledge and skills are necessary to manage the receipt and scheduling of customer orders. Processes included in this competency include standard order receipt, exception identification, and exceptional resolution. However, key to the success of this function are:

1) The ability to work effectively with customers to clarify requirements and negotiate solutions when constraints exist.

2) They can effectively collaborate with other company functions to assess their ability to meet customer needs and develop workaround solutions when necessary.

4.    Master Production Scheduling

The Master Production Scheduling is a statement of the anticipated manufacturing schedule for selected items by quantity per planning period (Fogarty and Hoffman 1983; Higgins and Tierney 1990). It responds to the Forecast Demand described by the production plan and the actual demand in terms of received customer orders.

This supply chain competency also includes effectively evaluating plant capacity and attaining the business’s strategic objectives as reflected in the production plan.

Unlike a Forecast Of Demand, the master schedule represents a management commitment, authorizing the procurement, manufacturing, or materials in most cases.

Enroll in the course “Production Scheduling” by Kien Leong now to learn the fundamentals of production scheduling, including capacity planning, demand forecasting, and optimization techniques, to ensure efficient and timely production.

5.    Inventory Management & Optimization

Inventory management is the practice of managing inventory as working capital. The key objective of inventory management is to increase corporate profitability through improved inventory activities such as demand planning, inventory optimization, safety stock management, excess and obsolete inventory management, or the proper inventory levels to meet customer service expectations with a minimum possible inventory.

You can read another practical, The Ultimate Guide to Inventory Planning Methods and Excess and Obsolete Inventory Policy Guide – Revised & Updated, to gain in-depth knowledge of inventory management and improve this move competency.

Lastly, you should try the Inventory Optimization Tool in Excel.

Output You Will Get from Inventory Optimization Tool:

• The total cost of goods sold
• Current inventory had
• Planned Safety stock value
• Inventory Turns
• Days on Hand
• The current on-hand inventory (in $ value and % of total) is grouped by the number of months of stock available.
• Inventory optimization proposals (A. Stock to stock with new safety stock levels; B. Stock to non-stock; C. Non-stock to non-stock; D. Non-stock to Stock with new SS levels)
• Current on-hand inventory profile in terms of (A. Usable inventory; B. Excess inventory; C. Obsolete Inventory)

Paul Denneman’s course, “Inventory Management Fundamentals for Supply Chain,” can help you learn more about the impact of inventory management on the supply chain, optimizing inventory levels, and stock counting procedures.

You can also refer to 18 Targeted Inventory Reduction Strategies for Supply Chain Professionals.

6.    Materials Replenishment Planning

SAP has defined this competency very well as,

“the main function of material requirements planning is to guarantee material availability, that is, it is used to procure or produce the requirement quantities on time both for internal purposes and for sales and distribution. This process involves the monitoring of stocks and, in particular, the automatic creation of procurement proposals for purchasing and production.”

In doing so, material requirements planning tries to strike the best balance possible between

• Optimizing the service level and
• Minimizing costs and capital lockup.

The material requirements planning process needs all the information on stocks, stock reservations, and stocks to calculate quantities. It also requires information on lead times and procurement times to calculate dates. The process defines a suitable MRP and lot-sizing procedure for each material to determine procurement proposals.

This supply chain competency includes the ability to take the Master Production Schedule replenishment quantities and “explode” quantities through the bill of materials to create component requirements, which are compared against on-hand and on-order and forecast. Purchasing or manufacturing orders are subsequently planned and either placed or deferred by pull in or push out messages.

To Improve this competency, I have developed an Inventory Planning Pack containing tips, tricks, and theories on Managing Materials Replenishment, excess, And Obsolete Inventory.

7.    Logistics, Warehousing and Distribution

One key supply chain competency is managing the physical flow of goods. This means having the knowledge and skills necessary to effectively manage logistics communication, warehouse and storage management, material handling, and the distribution of goods (including reverse logistics).

Learn the history of the Industrial Revolution, eCommerce in warehouse & distribution, material handling equipment, technology in supply chain, and the future of fulfillment with Paul Denneman!

This includes activities like Goods-in (receiving), put-a-way to stores, picking, packing, shipping, and managing return goods from the customer. However, competency consists of the knowledge and understanding of the activities mentioned above, creating the right processes, and practical application. Moreover, you should refer to the blog 5 Basics Warehouse Activities You Should Focus on Improve to understand more details.

Furthermore, you should use this Self-Assessment warehouse audit tool, which enables you to identify areas for improvement.

However, we have developed a comprehensive Logistics KPIs Dashboard that explains in detail the six essential Logistics KPI attributes for any business shipping physical products.

8.    Knowledge of Continuous Improvement Processes or Methods

As the name suggests, knowledge of the processes or methods that seek to improve performance assumes more and smaller incremental improvement steps. In general, learning and implementing the best known of these are those above: Lean Manufacturing (JIT), Six Sigma, Lean Six Sigma, and Agile.

By learning these philosophies, it is not the rate of improvement that is essential; it is the momentum of progress in the area you want to improve.

If you are looking for Six Sigma Project Examples, you can Find Them Here. Refer to this 5S Kaizen Guide (shown below) to eliminate clutter by Sorting, arranging it with straightening, showcasing it with shine, creating a proper guideline by standardizing, and inspiring it with sustain.

Final Thoughts on Supply Chain Technical Competencies:

I believe those are the eight most essential Supply Chain competencies. Each has definitely given my career a huge technical edge. I hope some of them are helpful to you, too.

Which competency is your favorite of the above?

OR

do you want to add any more technical competencies I have missed?

You might want to reflect on the above supply chain skills and Design An Awesome Custom Resume.

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Reference:

Benson P. Shapiro, V.K. Rangan, and J.J. Svioka, “Staple Yourself an Order, “Harvard Business Review 70, no. 4 (July – Aug. 1992), pp. 113-22.

Recommended Supply Chain Guides to Improve Your Supply Chain Skills.

• Excess and Obsolete Inventory Policy Guide
• 5S – Kaizen Guide: Organizing the Workplace for Flow
• Stocktaking: The Ultimate Guide (Stocktaking Procedure)
• Materials Management Competencies Assessment
• Six Sigma Project Examples to Get You Certified