Supply Chain: The Short-Term Talent Solution for Long-Term Gains
Despite some easing, the global supply chain is still struggling to find talent to keep up with demand. The short-term solution that can lead to long-term gains.
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Supply Chain: The Short-Term Talent Solution for Long-Term Gains
The problem: Supply chain managers are struggling to keep up with demand amid an ongoing labor shortage and digital and political disruption.
Why it matters: The changes are putting pressure on managers to drive throughput, capture every available order, and take care of their customers.
The solution: Drive performance and improve efficiency with interim talent until a permanent solution can be found.
It wasn’t the news Chris Winans was expecting. It was the middle of a typically busy week when the manager at one of the key plants in Cabinetworks’ supply chain gave his notice. The facility, which manufacturers several thousand kitchen cabinets a day as well as provides raw lumber to other plants in the company’s network, was already operating at full capacity and could ill afford a slowdown in production. Winans, Cabinetworks’ Chief Operating Officer, needed to bring in a plant manager—and fast.
“It takes between 90 and 120 days to recruit a quality plant manager, and we can’t be without someone for that long of a time,” says Winans.
It’s a problem familiar to a lot of companies. Despite some easing over the last few months, the global supply chain is still struggling to catch up to demand. From sporadic shutdowns due to COVID or the war in Ukraine to ongoing labor shortages in key industries like logistics, there’s a backlog for all kinds of goods and services. At the same time, inflation and interest rate hikes are raising the price of what goods are available, creating pressure on managers to drive cost reductions while staying on schedule.
The last thing an executive like Winans has time for is a lengthy recruiting process for a new plant manager. “It is a competitive market, and if we don’t fill key positions right away, we could slow down or move backwards and lose customers,” says Winans, whose company ranks as the second-largest cabinetry maker in the U.S. with 19 different plants across the country.
To bridge the gap until a permanent hire is found, companies are increasingly turning to interim executives and professionals to not only maintain operations and momentum, but also to drive further improvements, says Daren Samuels, National Practice Director of Manufacturing for Korn Ferry’s Interim Executives. Call it the interim solution. These highly specialized executives and leaders allow a company like Cabinetworks to not only keep production going, but also help improve factory output, optimize shift scheduling, and provide on-site management and consulting. “These aren’t typical temporary workers,” says Samuels. “They are industry and functional experts who can stabilize an operation and drive performance until a long-term solution is found.”
Winans called Samuels shortly after receiving notice from his plant manager, for instance. By the end of the week, Samuels had lined up two expert candidates that had plant management as well as executive procurement and supply chain experience. After interviewing each, Winans chose his candidate, who was at work managing the plant on Monday morning. “In a one-week period I went from having a key plant management vacancy to having someone in the role,” says Winans. Moreover, while he wouldn’t be specific, he added that the plant “hasn’t seen a drop in performance.”
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In August, lawmakers passed the CHIPS Act, a major attempt to reestablish the U.S. as a leading destination for semiconductor manufacturing. The legislation earmarks $250 million in the form of investments and tax credits to companies operating or building chipmaking facilities in the U.S.
For Materion, a supplier of one of the key materials used in chipmaking, the passing of the CHIPS Act represents a potential growth opportunity. With the pandemic exposing companies who over indexed on Asia-based suppliers and the purpose movement prioritizing locally sourced materials, Ohio-based Materion is perfectly positioned to pick up market share, something it has already done since the pandemic, says Richard Oliveri, the company Vice President of Operations. “There are benefits to being an in-region supplier,” he says, noting that between COVID-based shutdowns and the war in Ukraine clients want to avoid as many global supply chain interruptions as possible, which is leading opportunities for U.S.-based companies. Even though the first investments stemming from the CHIPS Act won’t take effect until 2024, Oliveri knows Materion has to expand its already strong customer relationships and prepare its operations now.
At the height of the pandemic, when the demand for the chips that power everything from consumer electronics to cars was at its highest and supply was at its lowest, Oliveri enlisted Korn Ferry’s Interim Executives to advise on ways to increase efficiency at a key factory. After conducting an initial on-site assessment, Korn Ferry’s interim experts recommended several changes including increasing line loading frequency, leveraging unused equipment through better scheduling, and capturing lost production hours by re-engineering shift changeover, startup, shutdown, and inventory audit procedures. The result: production cycle time decreased to 45 minutes from an hour and output at the plant increased 25%.
More importantly, Korn Ferry’s Interim Executives were engaged to work with Materion leadership to assess an upcoming capital investment for a major project, which led to specific capital enhancements. “Sometimes you need the push of a third party,” says Oliveri of Korn Ferry’s role in moving the project forward.
Without the interim help, Oliveri says Materion would have almost certainly lost precious lead time in serving customers as it navigated through the supply chain disruption caused by the pandemic. Instead, the fact that the interim placements were able to help increase productivity “gave us confidence that our customers will stick around while we make the investment to increase capacity over the next two years,” says Oliveri.
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If the pandemic taught supply chain leaders anything, it was that mitigating risk requires visibility into the entire supply chain. Put another way, they need to vet not only their suppliers but also the suppliers of their suppliers and so on down the line. That wasn’t the case before, says Sajid Kunnummal, Vice President and Chief Procurement Officer at Illinois-based truck and school bus manufacturer, Navistar. “The expectation was that suppliers managed downward,” he says.
Part of the reason for not establishing relationships with the entire multi-tier supply base was because it was too onerous. Kunnummal indicated that assembling a truck involves components from more than a thousand tier-1 suppliers, for instance. The other reason companies didn’t look deeper into their supply chains is because there has never been a situation where a crisis has impacted every supplier across every tier for such an extended period. “Production at OEM’s (original equipment manufacturers) like Navistar have been severely impacted over the last couple of years largely due to supply constraints from tier-3 or tier-4 suppliers, necessitating the urgent need to get a deeper understanding and visibility of the entire supply chains,” says Kunnummal.
In the aftermath of that experience, Navistar, like many other companies, made a commitment to engage directly with its lower tier suppliers. The goal, says Kunnummal, is to develop stronger relationships and also to educate lower tier suppliers on the end use of their product. A chipmaker in Taiwan, for instance, may not know if the chip it makes is going to a firetruck or a smartphone. “Ensuring appropriate allocation from constrained suppliers is everything in a crisis,” he says.
With a fairly lean organization, there was no way Kunnummal’s team could effectively manage multiple crisis situations across such an extensive supply base. And neither was it sensible to go out and hire a bunch of experienced people to manage a situation which was constantly evolving, with no clear line of sight to an end. So there was an urgent need to bring in seasoned supplier development and procurement professionals who could visit multiple supplier sites, clearly assess the situation, engage with senior leaders, and effectively implement corrective actions to ensure business continuity. “This required reaching out to companies like Korn Ferry who could provide rapid interim support to reinforce our internal team and deploy contractors who can hit the road running,” says Kunnummal.
Interim support accrues to internal staff and company performance in other ways as well, says Korn Ferry Interim Executives’ Mike Harris. Extended job vacancies, as has been well documented, takes a toll of existing staff who often have to take on additional clients and longer hours. “Having an open leadership role can be challenging and taxing on other key leaders in the business,” says Harris, noting that it could result in burnout, stress, stagnant productivity, and increased turnover.
The challenges in the supply chain aren’t going away anytime soon. In fact, the labor shortage, digital transition, geopolitical issues, and sustainability concerns currently disrupting the system are likely to take several years to solve. Against that backdrop, Cabinetworks’ Winans says, “the use of interim experts can help build a bridge until a permanent solution is found.”