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Now is the Time for Supply Management More Promising Than Ever!

NAPM – Willamette ValleySeptember 2013

Darin Matthews, CPPO, C. P. M.Portland State University

Supply Management Defined

“The identification, acquisition, access, positioning and management of resources and related capabilities that an organization needs o potentially needs in the attainment of its strategic objectives.”

(Institute for Supply Management, 2008)

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Supply Management Includes:

(Institute for Supply Management, 2008) 3

Disposition –

Investment Recovery

Materials Manageme

nt

Product – Service

Development

Manufacturing

Supervision

Logistics Inventory Control

Quality Control

Strategic Sourcing

Procurement -

Purchasing

Warehousing DistributionTraffic -

Shipping

Supply Management Impacts

Account for 15-20% of the gross domestic product (GDP) within the United States

Essential to operational efficiency Can impact a company’s bottom line like no other

discipline Directly affects customer satisfaction and retention The most critical business discipline in the world

today

Source: University of San Francisco

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Principal Goals of Supply Management

Implementation of systems that utilize market intelligence and supplier relationship management

Efficiency in operations and achievement of cost minimization and improved profitability

Achievement of the strategic goals and objectives of the organization

Recognition of globalization issues, negotiation strategies and cost analysis

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National Headlines

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The Hot New M.B.A., Supply Chain ManagementMore schools are ramping up their programs, adding majors and concentrations as employer demand grows

The Wall Street Journal, June 2013

THE WALL STREET JOURNAL

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• Global operations becoming more complex

• Companies are scrambling to hire supply managers

• Manufacturing, retail, technology and consulting sectors

• SM experts are hard to come by

Increasing the Supply of Supply Managers

School Location Program YearGovernors State University

University Park, Illionois

MBA in Supply Chain Management

2013

Portland State University

Portland, Oregon

MS in Global Supply Chain Management

2013

Texas Christian University

Fort Worth, Texas

MS in Supply Chain Management

2013

Arizona State University

Tempe, Arizona MS in Suppply Chain Management

2014

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More Headlines

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Supply Chain Management,The Next Big ThingMore students are seeing career possibilities in the major

Business Week, September 2011

Turning Students Away

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• Lehigh University College of Business has the most SCM majors in program history

• Maxed out at 45 students per term• North Carolina State exploring possibiliy

of SCM concentration with accounting degree

• Portland State has a strong record of employment for graduates

• Arizona State University has doubled SCM majors ince 2008

Supply Chain Jobs

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• ASU Carey School of Business• 64% have jobs at graduation (2010

undergraduate)• 100% of Supply Chain-MBAs placed• 75% of Marketing-MBAs placed

• Institute for Supply Chain Management• SM salaries increased 8% (2011)• Entry-level salaries also on the rise

• Existing supply management professionals• Improved stature within organization• Opportunity to exercise talent

management

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Sectors

Regional Case StudyPortland State University,

Supply and Logistics Management Program

BS in Supply/Logistics Management (existing)

MS in Global Supply Chain Management (new)

Annual Career Fair at PSU High percentage of graduates placed

(90%+) Industry partners that have hired PSU

supply management graduatesBoeing, Nike, Ratheon, Boise Portland SchoolsMultnomah County

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Current Workforce

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• Existing supply managers continue to demonstrate their value

• Industry experience is leveraged for supply management positions and advancement opportunities

• With ever competitive workforce, supply managers must continue to develop their skills (advancing technology, global markets, cost negotiations, etc.)

• Assume a mentorship role for new professionals entering the workforce

Development Opportunities

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• Professional development courses through ISM and others• Managing Supplier Performance• Legal Considerations of Software

Licensing• Earning professional credentials

• (C.P.M., CPSM, CPSD)• Degree completion programs (many

online)• Utilizing performance metrics to drive

continuous improvement• Inventory performance (accuracy,

turns)• Cost reduction (i.e. renegotiation)• Return on investment (ROI)

SM: Career Overview

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• Supply management continues to have impacts in all areas of a company’s operations

• Leading firms are elevating the supply management function (WalMart, Dell, DHL)

• Job outlook remains healthy in coming years for both new graduates and mid-career job seekers

• Most companies seek functional experience as well as SM coursework

• Certification (C.P.M., CPIM) are not required, but do provide an edge in competitive job market

Source: Career Overview, Supply Chain Management, 2012, Wet Feet

SM: Career Overview

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• Proficiency in enterprise resource planning (ERP) greatly enhances your marketability

• Attention to detail is important and should be reflected throughout the job seeking process

• Communication and people skills are more important than ever

• The field will continue to blur over titles and responsibilities

• Supply Management is standard term, replacing Logistics and Materials Management

Source: Career Overview, Supply Chain Management, 2012, Wet Feet

ISM Certification

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• Certified Professional in Supply Management (CPSM)

• Certified Professional in Supplier Diversity (CPSD)

• Certified in Supply Management (CSM)• Certified Purchasing Manager (C.P.M.)• Accredited Purchasing Practitioner (A.P.P.)

ISM Salary Survey 2012

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• Median SM salary increased by 3.5%• Six-figure salaries increased to 41% (from

38% in prior year)• 79% reported increases, 7% decreases• Leader factors in job selection

1) Job satisfaction2) Benefits package3) Financial stability of organization4) Work/life balance5) Salary6) Promotion opportunities

ISM Salary Survey 2012

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• Factors impacting salary• Position, gender, responsibility,

education level, credentials, location, and size of organization

• More years of experience = higher salary • Males earned 32% more than female

counterparts• Females in CPO roles earned 54% more

than males• Degreed professionals earned 35% more• Certified professionals earned 8% more

Supply Chain TrendsUniversity of Tennessee Top 10 Game

Changers

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• Customer relationship management• Segmenting customers, individualizing

supply chain solutions• Collaborative supplier relationships

• Increase collaboration, increase revenue• Transformational strategies

• Document supply chain strategy• Process integration

• Eliminating silo walls• Driver-based metrics

• Measuring performance, setting goals

Supply Chain TrendsUniversity of Tennessee Top 10 Game Changers

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• Information sharing and visibility• Sharing and linking data

• Demand management• Increase forecast accuracy

• Talent management• Hiring top supply chain talent

• Virtual integration• Stick to core competencies, outsource

the rest • Value-based management

• Supply chain excellence leads to shareholder value

Emerging Trends In Supply Chain Management

Green supply chains

Risk manageme

nt

Supply chain agility

Moving supply

closer to home

Increased logistics

costs

Source: Iowa State University, University Extension, Supply Chain Management for Small and Medium Sized Manufacturers

Green supply chains

Source: Iowa State University, University Extension, Supply Chain Management for Small and Medium Sized Manufacturers

• More than doing the “right thing”• Saves money and improves supply

chain performance• Leading firms are extending green

efforts to suppliers and logistics

Supply chain risk management

Source: Iowa State University, University Extension, Supply Chain Management for Small and Medium Sized Manufacturers

• Unanticipated disruptions to material flow (costly)

• Finding better ways to deal with disruptions

• Companies trying to anticipate disruptions

• Key is to mitigate, not eliminate

Supply chain agility

Source: Iowa State University, University Extension, Supply Chain Management for Small and Medium Sized Manufacturers

• Ability to be nimble and agile• How quickly can a firm respond?• Real time information and visibility

within the supply chain is key

Moving supply closer to home

Source: Iowa State University, University Extension, Supply Chain Management for Small and Medium Sized Manufacturers

• Low labor costs in developing countries been driving force behind outsourcing

• In recent years those labor costs are increasing

• Example: Labor in China increased 20% while US Labor only 3%

• Firms are reconsidering past outsourcing decisions

Dealing with increased logistics costs

Source: Iowa State University, University Extension, Supply Chain Management for Small and Medium Sized Manufacturers

• In past 5 years transportation costs have increased over 50%

• Energy prices are primary factor• Total costs in a supply chain

network must be analyzed• Opportunities for cost reductions

with logistics providers

Procurement and supply

has “emerged from being tactical and operational in nature … to being considered of major strategic importance.”(Humphries, 2001)

Emergence of Supply Management

Traditional Characteristics of Purchasing and Supply

According to Twyford (1915)

ReactiveClericalUnimaginative Unglamorous

Supply chain management will continue to grow and evolve as organizations realize the benefits it provides

Source: Lisa Ellram & Thomas Choi, Supply Management for Value Enhancement, 2000

Evolution of Supply Management

Supply Management, technology and the future ...

“..all of us must pay close attention to technological advancements…it is either that or be left behind.”

Russell Broeckelmann

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A leadership role – seeking new opportunities and driving them

A managerial role – managing systems and relationships

A creator role – identifying new opportunities and making them available to the organization (strategies, supply options, revenue streams)

A needs enabler role – enabling others in the organization to satisfy their own needs

(Joseph Cavinato, 2000)

Supply Managers Must Assume

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Summary While historically overlooked (and under

appreciated) Supply Management’s “star is on the rise”

Opportunities will continue to exist in SM, both for new and established professionals

Investment in education and professional development will only enhance marketability

Experts have said for decades that SM is of strategic importance, now others realize this

Trends in SM will continue to make it an exciting and rewarding field

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Supply Management

The world needs supply managers to make it happen!

Victor Taylor, 2011

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References and ResourcesInstitute for Supply Management. Certification

www.ism.ws/certification ISM 2012 Salary Survey, Inside Supply Management, May 2012“The Hot New MBA: Supply Chain Management”, The Wall Street

Journal, June 5, 2013“Supply Chain Management: The Next Big Thing?”, Bloomberg

Business Week, September 12, 2011Six Key Trends Changing Supply Management Today, Hitachi

Consulting Corporation, 2009Emerging Trends in Supply Chain Management, Iowa State

University, Supply Chain Management, University Extension, www.ciras.iastate.edu

“Supply chain trends to boost shareholder value”, Supply Management, July 2, 2013, Chartered Institute of Purchasing and Supply

“Career Overview: Supply Chain Management”, December 3, 2012, Wet Feet. www.wetfeet.com

Supply Chain Management for Value Enhancement (2000), Ellram and Choi, ISM: Tempe, Arizona