Companies are starting to pay their supply chain managers more and more. It’s proof that these positions and the extensive knowledge the people who hold them need, are becoming more valuable to companies than ever.
According to the latest survey from the Institute for Supply Chain Management, the average salary for a supply chain professional working in market intelligence is more than $139,000 in 2017.
That’s up more than 4 percent over the previous year. This is at a time when American wages in general are stagnating.
Supply chain executives still don’t serve in many C-suites. But this position is a competitive advantage for modern companies. Supply chain employees need to be able to manage people, keep dozens of different departments and suppliers organized, and incorporate changing technology for their companies’ benefit.
Companies are increasing salaries for supply chain managers industry-wide. Expertise in this field is valuable enough to companies that they’re willing to pay for it.
Companies Need High-Quality Supply Chain Employees
“Supply chain management” didn’t exist as a job title until a few decades ago. But the position is fast evolving, and becoming more critical to companies’ survival.
First, supply chain managers have to effectively manage within their companies. They need to bring together diverse departments from design to customer service to IT, and understand each one’s needs and abilities. Then, they have to interface with external companies responsible for manufacturing, packing and shipping.
That would be challenging enough for even a highly trained manager. But what’s more, each component of the supply chain is rapidly evolving. Tariffs impact manufacturing and product development options. Warehousing and shipping are continually evolving as certain processes become more efficient through big data and algorithms, and others become automated altogether.
Generally, globalization and automation are continually making supply chain networks more and more complex, meaning companies need good logistics and supply chain management more than ever.
Companies need supply chain executives who know how to negotiate with many managers at once. Not only do they need to get the best deal on raw materials, they need to ensure their manufacturer can process those materials and so on.
Further, supply chain professionals need to know how to prevent supply chain disruptions. Though most manufacturing-based companies keep some inventory on hand, breaking one link in the supply chain can quickly decimate production capacity and by extension, corporate profits.
Scott Luton, managing partner with TalentStream LLC, a recruitment firm that works with large and midsize manufacturers and logistics firms told The Wall Street Journal in May:
“Companies want professionals who know how to negotiate and get those bottom-line savings…There is a huge emphasis being placed on finding talent that gets global trade and global enterprise.”
Supply Chain Management Requires a Diverse Skill Set
Supply chain managers are no longer simply managers, although they need to know how to negotiate and manage crises to keep production humming.
Today’s companies are now willing to pay more for supply chain executives with information technology skills, as more supply chain processes become automated. These leaders like those in many corporate sectors, need to know how to collect and analyze data to improve processes. The promises of big data and blockchain also make IT experience valuable.
The Institute for Supply Chain Management survey showed that certifications increase salaries significantly.
The average professional with no certifications made about $109,000 in 2017. One or more certifications boosted salaries to about $123,000. Those working in market intelligence saw salaries rise to $139,000, suggesting that those skills are particularly valuable.
As the pace of production and delivery accelerates in the e-commerce economy, supply chain managers need market intelligence skills. They must analyze consumer needs, understand how their market is evolving and pivot to meet those demands. They may need to incorporate cutting-edge technologies including artificial intelligence to streamline processes. And they certainly need to know how to analyze data and make predictions.
As costs rise in the globalized economy—import and export duties, transportation costs, labor costs, and more—supply chain managers play critical roles in maintaining companies’ bottom lines.
If they can keep costs down on the ground, the savings can trickle up to corporate profits. That makes higher salaries worth it.
Supply Chain Management Requires Creative Leadership
Supply chains have dozens of moving parts, and it’s likely that a few of them are in the hands of outside contractors. As such, supply chain budgets quickly become confusing to those who aren’t deeply familiar with them.
That means the supply chain can be a company’s greatest source of inefficiency, but also its greatest opportunity for savings. Organizations with efficient supply chains based on good relationships with their partners, can quickly cut costs and streamline production.
Great supply chain managers can stay on top of evolving regulations, technologies and contracts. They can identify problem areas and inefficiencies and target them for improvement. Good relationship management is critical for making those changes.
Amid all this demand for great supply chain management, however there’s not much supply. Supply chain programs are gaining popularity at universities, but as America’s Baby Boomers retire, companies are struggling to fill jobs that require deep specialization. Many Baby Boomers developed over decades in their roles.
To head off that challenge, companies are focusing not only on hiring but on retaining supply chain professionals. It can take a year or more to train a new employee for a narrowly focused analytics or management position. Then, companies need to keep those workers in house. That’s most easily done by raising their wages.
It’s obvious to executives that great supply chain leaders increase company value. But with a dearth of skilled managers for the foreseeable future, experts believe supply chain salaries will continue to rise—maybe even faster next year.