The Importance of Decision Making Skills for a Supply Chain Manager

January 10, 2020

When employers look to hire supply chain managers, effective decision-making is high on their list of desired qualifications. If you want to advance your career in the global supply chain, it’s essential to hone your problem-solving skills.

An effective decision-making process is the best defense against the unknown and helps to 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 apply problem-solving skills whenever your supply chain experiences a glitch. A minor manufacturing issue can turn into a much larger problem if an 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 change frequently, assessing each new situation and quickly implementing solutions is essential.

As a supply chain manager, you create a buffer between your supply chain and regulatory uncertainty. To do that, you must stay on top of the latest developments in international relations that could affect your operations in the global supply chain. You must be ready to quickly change your supply chain management strategy when the situation demands it.

One element of the supply chain that can put your problem-solving skills to the test is transportation logistics. Deciding if and when to implement a backup plan is crucial when weather delays a shipment or puts a warehouse out of commission.

As a savvy 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 management isn’t restricted to challenges in manufacturing and logistics. Changes in consumer demand and perception can also send ripples through your operations. 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, such as a recall, forces you to ask difficult questions. 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 skills to deal with these challenges are necessary for business leadership responsibility.

What Decision Making Skills Are Critical for Overseeing a Global Supply Chain

Senior supply chain professionals need several decision-making skills to be successful. This checklist includes thirteen skills that guide the decision-making process in a global supply chain.

The ability to identify problems in the supply chain

The best supply chain managers can spot problems early and take action before they cause a significant rupture in the supply chain. Since it is impossible to anticipate every problem, you must also be able to define issues in real time and then quickly formulate and implement solutions.

The ability to develop and communicate solutions

As a supply chain manager, you must develop solutions to problems that arise and communicate changes in operations to all parties involved. That includes informing and educating your team members on changes to a process. It can also mean coordinating with outside suppliers in manufacturing, transportation, or warehousing. Your aptitude for effective and clear communication is crucial to leading a supply chain organization.

The ability to identify trends and opportunities for greater efficiency, quality, and cost savings

Supply chains are dynamic. Rather than waiting for a challenge to arise, keep an eye on trends in supply chain management to make sure you’re aware of best practices. If a supply chain manager can spot opportunities to improve operations and create plans to take advantage of opportunities, their team can behave proactively rather than reactively.

The ability to leverage data and technology to analyze problems and opportunities in the supply chain

Data is your friend. You can make better choices when your decision-making process is based on sound data. Supply chain managers must stay abreast of the latest software innovations that improve job performance and help supply chains run seamlessly.

The ability to generate or source the data you need to make well-informed decisions

Data collection is a crucial asset for effective decision-making and for developing long-term goals. Supply chain managers must set up systems that consistently collect and analyze data on the performance of various elements in their 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 chains are affected by numerous factors outside your operations and often outside your control. As a supply chain manager, part of your job is to stay informed about legal and regulatory framework changes. Your long-term goals must account for actual and potential legal and regulatory developments so your operations can adapt.

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. Demonstrating the leadership to elicit ideas, develop the best ideas into actionable plans, and get all team members on board with operational changes are high-level skills appreciated by your colleagues.

The ability to elicit collaboration from external elements in a supply chain

Your internal team isn’t the only piece of the puzzle. As a supply chain manager, your skill at communicating and collaborating with manufacturers, freight carriers, and fulfillment service providers is essential to your success. People at every stage of the supply chain can serve as resources to help you with problem-solving and effective decision-making. 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 can resolve. That is why prioritizing is essential to making decisions. 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 weighing the pros and cons of a decision is an essential skill for 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 and successes will help you make better-informed decisions about the future. It’s the key advantage of professional experience. But it’s vital to track problems at every level of the supply chain, even those that can be fixed at the moment, so supply chain managers can take steps to prevent the same issues from arising in the future.

The ability to be flexible to events

Thinking on your feet is a considerable 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 your staff’s efforts and safeguard the organization’s goals.

The ability to know when to stand by a decision and when to change course

A critical leadership and decision-making skill for supply chain managers is discernment. The willingness to stand by a decision when you feel it’s right, even in the face of opposition, is an important asset. While understanding when you’ve made the wrong decision and correcting course is not always easy, it’s vital to keep 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 a fact of life. When making decisions, the best practice for supply chain managers is to build a margin to allow for the unforeseen. Each decision should include a backup plan if circumstances render the original plan unworkable or inefficient.

Tools for effective decision-making in supply chain management

Supply chain managers can also use several decision-making tools and strategies to weigh the pros and cons of each situation. These tools help create processes for effective decision-making that apply in different situations.

The rational decision-making model

In 2007, researchers at the University of Lund in 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. Conduct a gap analysis to explore the work needed to bridge the gap between where you are and the desired solution
  4. Gather data and explore alternative solutions
  5. Analyze possible outcome
  6. Choose the best solution for your situation
  7. Put the decision into action.

The rational decision-making process can help develop both long-term goals and solve short-term problems. It provides a set of steps to follow to ensure you have considered all the options and ramifications of various choices.

Pareto analysis

The Pareto Principle states that 20% of clients account for 80% of profits. 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 for supply chain managers is that it allows you to separate the critical influences from the clutter. If multiple factors led to a problem in the manufacturing segment of your supply chain, you would quantify the amount that each factor contributes to the issue and likely find that 20% of the factors caused 80% of the problem. This helps clarify your decision-making 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 on changing elements that would have only a minor impact.

SWOT analysis

SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. A SWOT analysis is a simple process for effective decision-making that helps 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. Supply chain managers can quickly spot pitfalls and opportunities by writing these factors down in this simple format.

PEST analysis

The PEST analysis is another tool that lends itself to visual mapping for effective decision-making. The acronym stands for Political, Economic, Social, and Technology. This tool can help you make decisions about a supply chain based on external factors. Since most supply chains involve external partners and cross geo-political borders, the PEST analysis is helpful for supply chain managers setting long-term goals.

Decision tree

Another visual mapping tool, the decision tree, can help predict outcomes and weigh pros and cons. To create a decision tree, write the situation at the top of 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 for Supply Chain Leadership

Experience is an excellent teacher. But, like any ability, these problem-solving skills can benefit from sustained learning in an environment with other professionals. The Master of Science in Supply Chain Management Online from the University of Tennessee, Knoxville, offers a robust curriculum that will help you develop the decision-making skills needed to succeed in your supply chain management career.

There are several advantages to continuing education for supply chain managers:

  • In supply chain management, mistakes are costly. Rather than facing each situation for the first time, you can supplement your training with an advanced degree focused on the practical aspects of managing supply chains. As a program for professionals, UT’s MS SCM Online will give you the benefit of learning alongside other professional students from a range of industries. The more knowledge and resources you bring to the job, the more likely you will respond to situations wisely.
  • There are some tools that you can only learn at school. It’s hard to find time in a packed workday to survey the latest data analysis innovations or learn how to predict the effect of potential legislation. These and other skills necessary for effective decision making are best practiced in a classroom where skilled faculty can guide you. You get the benefit of the most advanced supply chain management theories in a setting where you can ask questions and get help to absorb the materials entirely.
  • A degree is a gateway to a better position. With an MS, you can compete effectively for positions with greater responsibility

Learn more about the MS SCM Online program, including key dates, informational webinars, graduate testimonials, and registration information. Fill out the form below to request more information.

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