The decision-making process for supply chain management is complex and involves multiple people across multiple teams. When employers look for someone to oversee supply chain management, effective decision-making is high on the list of desired qualifications. If you want to advance your career as a manager in the global supply chain, it’s important to hone your problem-solving skills.
An effective decision-making process is the best defense against the unknown for any organization. Many companies look to their supply chain management professionals to design and implement decision-making processes that will keep the organization one step ahead in an ever-changing world.
Importance of decision-making skills in supply chain management
A supply chain manager has to make hard decisions, often quickly with real-time data. It is crucial to have problem-solving skills to apply whenever your supply chain experiences a glitch. A small manufacturing issue can turn into a much larger problem if your organization doesn’t have effective decision-making procedures in place.
Managing a manufacturing and logistics operation that spans borders and continents requires nimble and effective decision-making. In a world where tariffs and trade regulations can and do change frequently, problem-solving skills that allow you to assess each new situation and quickly implement solutions are essential.
As a supply chain management professional, your job is to create a buffer between your supply chain and regulatory uncertainty. To do that, you need to stay on top of the latest developments in international relations that could affect your operations in the global supply chain. You have to be ready to change your supply chain management strategy quickly when the situation demands it.
One element of the supply chain that can put your problem-solving skills to the test is transportation logistics. When weather delays a shipment or puts a warehouse out of commission, making decisions about whether and when to implement a backup plan is crucial.
As a savvy supply chain manager, you may be able to find cost savings and reduce delays at many points in the transportation portion of the supply chain. Your skill at making decisions about every factor, from the mode of shipping, to the freight company, to the efficiency of operations at the receiving dock, can contribute to a smooth-running supply chain.
Effective decision-making in supply chain management isn’t required only because of challenges in manufacturing and logistics. Changes in consumer demand and perception can also send ripples through your operations, sometimes almost overnight. One viral social media post could drive a spike in demand for a product. It’s your job to solve how to shift production and rearrange your supply chain to meet the new demand. Conversely, a factor that drives a steep drop in demand, like a recall, forces you to make difficult decisions about your supply chain. Is the drop temporary or permanent? If you cancel one segment of your production, how hard will it be to reactivate it in the future? The problem-solving skills to deal with these and other challenges are necessary to handle the responsibility of an executive position.
What decision-making skills are critical for professionals overseeing a global supply chain?
There are a number of key decision-making skills that senior supply chain professionals need to be successful. This checklist of thirteen skills provides guidance in the decision-making process as a key stakeholder in the global supply chain.
The ability to identify problems in the supply chain
The best supply chain professionals can spot potential problems before they arise and take action before they cause a major rupture in the supply chain. Since it’s not possible to see every problem in advance, you also need to be able to define problems in real time, then quickly formulate and implement solutions.
The ability to develop and communicate solutions
As a supply chain leader in your organization, you not only need to develop solutions to problems that arise, but also communicate changes in supply chain operations to all parties involved. That may mean informing and educating your team members on changes to the process. It can also mean coordinating with outside suppliers in manufacturing, transportation or warehousing. Your aptitude for clearly communicating your decisions is a key asset to your role in supply chain management.
The ability to identify trends and opportunities for greater efficiency, quality and cost savings
Supply chains are dynamic and your leadership and decision-making process should be as well. Rather than waiting for a challenging situation to arise, keep an eye on trends in supply chain management to make sure you’re aware of current best practices. If you can spot opportunities to improve supply chain operations and create plans to take advantage of those opportunities, your team can behave proactively rather than responding reactively.
The ability to leverage data and technology to analyze problems and opportunities in the supply chain
Data is your friend in supply chain management. When your decision-making process is based on good data, you’re able to make better choices. Supply chain leaders need to stay abreast of the latest software innovations that can improve job performance and help ensure that supply chains run seamlessly.
The ability to generate or source the data you need to make well-informed decisions
Data collection is a key asset for effective decision-making and for developing long-term goals. You’ll want to set up systems that consistently collect and analyze data on the performance of various elements in your supply chain. Accurate and up-to-date information is crucial to the problem-solving process and effective allocation of team resources.
The ability to incorporate legal and regulatory considerations into your decision making
Supply chain management is affected by numerous factors outside your operations and often outside your control. As a top supply chain management professional, part of your job is to stay informed about potential and actual changes to the legal and regulatory framework within which each supply chain function. Your long-term goals need to account for actual and potential legal and regulatory developments so your operations are ready to adapt to them.
The ability to synthesize ideas generated by a team and put them into action
Your team is a key asset to your decision-making process, if you know how to use it. The leadership to elicit ideas from your team, to develop the best ideas into actionable plans, and to get all team members on board with operational changes are high-level skills that will be appreciated by your colleagues.
The ability to elicit collaboration from external elements in a supply chain
Your internal team members aren’t the only piece of the puzzle. As a supply chain professional, your skill at effectively communicating and collaborating with manufacturers, freight carriers, and fulfillment service providers is important to your success in management. People at every stage of a supply chain can be resources to help you with problem-solving and implementing your decisions. Leverage your experience with third-party partners to create a more robust supply chain for your organization.
The ability to recognize the relative importance of competing priorities
Supply chain managers are called upon to address more problems than they have time to resolve. That is why prioritizing is so essential to making decisions in supply chain management. You’ll have to assign relative value to competing factors in your problem-solving process. The expertise to juggle all the elements of a complex supply chain when you are weighing the pros and cons of a decision is an essential skill as a leader.
The ability to leverage information from past successes and failures to guide future supply chain management decisions
A clear-eyed assessment of past failures as well as successes will help you make better-informed decisions about the future. It’s the key advantage of experience, and will serve your team well the better you are able to draw from your professional history. But it’s important to track problems at every level of the supply chain, even those that can be fixed in the moment, so you can take steps to prevent the same issues from arising again.
The ability to be flexible to events
Thinking on your feet is a huge asset for effective decision-making. When problems arise, nimble thinking and quick decisions may be the only way to avoid interruptions in your operations that can cost money and time. Unpredictability is what makes supply chain management jobs both exciting and challenging. The better you are at making decisions on the fly, the better you can utilize the efforts of your staff and safeguard the goals of the organization.
The ability to know when to stand by a decision and when to change course
A key leadership and decision-making skill in supply chain management is discernment. The willingness to stand by a decision when you feel it’s the right one, even in the face of opposition, is an important asset in supply chain management. However, while understanding when you’ve made the wrong decision and correcting course is not always easy, it’s vital to keeping your operations running smoothly. Those who look to you for guidance will respect your ability to deal openly and honestly.
The ability to build uncertainty and contingencies into your decision-making
Disruption is, always, a fact of life. When you’re making decisions about supply chain management, the best practice is to build in margin to allow for the unforeseen. Each decision should include a backup plan in case circumstances that you can’t predict render your original plan unworkable or inefficient.
Tools for effective decision-making in supply chain management
When practicing the skills above, there are also a number of decision-making tools and strategies that supply chain professionals can use to weigh the pros and cons of each situation that arises. These tools help you create processes for effective decision-making that you can apply in different situations.
The rational decision-making model
In 2007, researchers at the University of Lund, Sweden, applied a modified version of the rational decision-making process to a supply chain management case study.
The steps of the rational decision-making model are: 1. Identify the problem or opportunity. 2. Identify potential solutions. 3. Do a gap analysis to explore the work needed to bridge the gap between where you are now and arrival at your desired solution. 4. Gather data and explore alternative solutions. 5. Analyze possible outcomes. 6. Choose the best solution for your situation. 7. Put your decision into action.
The rational decision-making process is an advanced process that can help develop both long-term goals and solve short-term problems. It provides a defined set of steps to follow to make sure you have considered all the options and ramifications of various choices.
The Pareto Principle, which essentially states that 20% of your clients account for 80% of your profits, is named after the Italian economist Vilfredo Pareto. It is also known as the 80/20 rule. A Pareto analysis takes the 80/20 principle and applies it to decision-making.
The value of a Pareto analysis in supply chain management is that it allows you to separate the important influences from the clutter. If multiple factors have led to a problem in the manufacturing segment of your supply chain, for example, you would quantify the amount that each factor contributes to the issue. You are likely to find that 20% of the factors cause 80% of the problem. This helps clarify your decision-making process, so you can focus on the most important factors first. You spend your energy on fixing the issues that will do the most to change the situation while you save the effort changing elements that would have only a minor impact.
SWOT stands for Strengths, Weaknesses, Opportunities, Threats. A SWOT analysis is a simple process for effective decision-making that helps you outline the pros and cons of the situation.
To perform a SWOT analysis, create a chart with two columns and two rows. In the first square, list your company’s strengths. In the second, list weaknesses. On the bottom row, list opportunities and threats. By putting these factors down on paper in this simple format, you can quickly spot pitfalls and opportunities to guide you in your problem-solving process.
The PEST analysis is another tool that lends itself to visual mapping for decision-making. The acronym stands for Political, Economic, Social, Technology. This tool can help you make decisions about a supply chain based on external factors. Since most supply chains involve external partners and many cross geo-political borders, the PEST analysis is particularly useful for setting long-term goals in supply chain management.
Another visual mapping tool for decision-making, the decision tree, can be helpful in predicting outcomes and weighing pros and cons. To create a decision tree, write the situation at the top or the left side of a piece of paper. Then draw branches to represent different factors relating to the situation and their effects. Each branch may lead to additional branches representing different factors, decision points, or consequences. This is a flexible and easy-to-use tool to help supply chain managers with the problem-solving process.
Where to learn the skills you need for supply chain management leadership
Experience is an excellent teacher. But, like any ability, all of these problem-solving skills can benefit from sustained learning in an environment with other professionals. The online Master of Science in Supply Chain Management (MSSCM) from the Haslam College of Business at the University of Tennessee, Knoxville, offers a robust curriculum that will help you develop these and other decision-making skills that you will need to succeed in your supply chain management career.
There are several advantages to professional training:
- In supply chain management, mistakes are costly. Rather than facing each situation for the first time, your experience can be supplemented by the training from an advanced degree in managing supply chains. As a program for professionals, UT’s MSSCM will give you the benefit of learning from other students from a range of industries. The more knowledge and resources you bring with you to the job, the more likely that you can respond to situations wisely.
- There are some tools that you can only learn at school. It’s hard to find time in a packed work day to survey the latest data analysis innovations or learn how to predict the effect of potential legislation. These and other skills necessary to effective decision making are best practiced in a classroom setting, where skilled faculty can guide you. You get the benefit of the most advanced theories of supply chain management in a setting where you can ask questions and get help to fully absorb the materials.
- A degree is a gateway to a better position. With an MSSCM, you can compete effectively for positions with greater responsibility, greater remuneration and greater satisfaction.
Hone Your Decision Making with the Master of Science in Supply Chain Management for Global Supply Chain
Do you have the skills it takes to make decisions that help businesses meet their long-term goals? The Haslam MSSCM can give you the training you need to meet the challenges and opportunities of a supply chain management position.
Created for professionals without interrupting their careers, the program can be taken completely online. Haslam is top-rated among supply chain programs throughout the world, with connections to 75 supply chain partners and recruiters from more than 350 companies.
In addition to the globally-ranked faculty with Haslam, you’ll also connect with business leaders from some of the world’s biggest corporations. Along with a cohort of dynamic and exciting students, you’ll acquire the decision-making and problem-solving skills you need to maximize your impact as a leader in supply chain management.