APICS and American Society of Transportation and Logistics (AST&L) announced today that the boards of directors of both organizations have approved an agreement under which AST&L will merge with APICS upon ratification by an AST&L member vote. Following the close of the transaction, APICS intends to integrate AST&L within its existing operations.
Laurie Hein Denham, current AST&L president will join APICS as a senior director.
The announcement itself outlines three strategic rationales for this combination and essentially adds more logistics and transportation depth to the APICS body of knowledge. AST&L offered various certification programs including certification in transportation and logistics as well as distinguished logistics professional.
This announcement follows the April 2014 merger of the Supply Chain Council (SCC) with APICS. Thus far, the distinctiveness of SCC’s distinctive different corporate focused education and certification activities related to the SCOR Framework and high-level supply chain process and measurement metrics have, by our lens, been laggard since that merger. APICS has yet to sponsor a separate and distinctive conference related to Supply Chain Council’s unique body of knowledge and expertise. Similarly, local APICS chapters for the most part not adopted training and/or certification efforts related to SCOR. Current SCOR training is delivered by former SCOR certified instructors.
No doubt, with today’s announcement, APICS continues efforts to position itself as a prime supply chain certification and body of knowledge resource for global-wide supply chains. To sustain these efforts, APICS needs to keep pace with the clock speed of changes being placed on multiple industry supply chain teams today. Supply chain talent development and retention is constantly being identified as a significant challenge today and professional organizations, academic institutions and community colleges need to up their game in the offering of timely and pertinent training and professional development. Consolidation and/or mergers of professional organizations are a valid strategy if the sum of the parts is far more efficient, effective and timely to current needs.
This executive editor conducted a recent interview with Tom Derry, CEO of the Institute for Supply Management (ISM). Our interview was in conjunction with next week’s ISM 2015 Conference, which this year celebrates the 100th year anniversary of the organization. That is quite a noteworthy achievement offering a time to reflect on the past and future of the sourcing and procurement function.
For readers unfamiliar with ISM, this professional organization provides procurement and supply industry professionals and organizations with extensive education, research, publications and highly regarded certification. Most readers may be familiar with the often cited ISM PMI Index (Purchasing Manager’s Index) which compiles various supply chain activity indices among various industries. ISM, however, is a far broader organization focused on excellence in supply management.
Our interview touched on some broad topics. CEO Derry indicated that 2014 was an important year for ISM as an organization, one that included significant new initiatives. New staff has been recruited, finances have been solidified and new initiatives, such as attracting Millennials for careers in procurement and supply chain management, have provided broad member organization interest. Millennials will be critically important for the broad supply chain management community in the decades to come. Supply Chain Matters has previously highlighted ISM’s 30 Under 30 Rising Stars Program and we are in the process of interviewing past and current “Stars” which will be featured in upcoming blog postings.
In our interview, we touched upon ISM’s current certification programs. Because of increasing global interest and demand, CPSM (Certified Professional in Supply Management) certification exams are offered in 5 languages with nearly half of applicant interest coming from outside the United States. That is encouraging news to the global demand for recognizable skills and standards.
We wanted to sense CEO Derry’s observations of the burning topics currently on the minds of the sourcing and procurement community. One theme is macroeconomic uncertainty reflected in current volatility of commodity prices and where they may be headed. Another is top-line revenue growth, especially since demand has been slacking in mature economies while some industries are discovering slow to no growth among emerging economies. Mr. Derry described the opportunities as supply chains becoming “globally local”, where cost- opportunistic production is sourced closer to the end customer and can be catered to specific regional market and consumer needs. It is about the understanding of what is the total cost of sourcing to support both lower-cost product strategies and leveraging the most promising local markets.
In our interview we wanted to further probe on the current climate for procurement, namely whether procurement leaders are being directed towards more and deeper cost savings or whether joint innovation in processes and products is in the forefront. CEO Derry indicated that from his travels and conversations, a mind shift is occurring. He specifically cited an automotive industry example where a CFO was drilled by Wall Street analysts on cost reductions in manufacturing. The reply indicated that new technology, in areas such as navigation and driver safety innovations, incorporated in today’s vehicle models are clear signs that innovation is now coming from the supply base. This, in-turn, has led to gaining pricing power in the market. These efforts are becoming great examples of finding innovation and finding top-line revenue growth.
Supply Chain Matters recently highlighted reports that General Motors is initiating more longer-term, strategic relationships with key suppliers in order to foster more innovation in vehicle components and sub-systems.
Derry further believes that, over the past 20 years, a mind shift developed for cutting out cost. Today, arbitrage opportunities for cost advantage are mostly gone, and the new emphasis has to shift toward how procurement can influence or directly impact more value for the business.
Looking ahead, given that this year’s conference is a celebration of the 100th anniversary of ISM, we asked Derry to describe the ISM strategic agenda moving forward. First, Derry emphasized that there is a need to celebrate the past century’s profession of procurement accomplishments. Supply Chain Matters would add our observation that many of today’s occupations have not endured as long.
Moving forward, because member needs are changing, Derry noted a more globally focused basis of ISM’s member services, with added emphasis for digital and mobile based content delivery. Expect ISM to be active in establishing standards in ethics and social responsibility related to procurement practices reference points. Derry iterated that customers have high expectations not only related to products, but how products are created. He specifically cited outdoor clothing provider Patagonia as a company that “walks the talk” in socially responsible sustainable materials. The apparel provider’s Footprint Chronicles examines Patagonia’s life and habits as a company and provides transparency to its end-to-end supply chain. Derry believes that firms will be increasingly aligned with values among the customer base. In that light, we both shared examples related to how our children make their buying decisions not only factoring cost, but the standards and policies of the particular company. Another particular example was buying a new car, specifically on how Subaru markets and sells its vehicles, not only features and cost, but also its zero landfill and sustainable materials and energy standards associated with Indiana based manufacturing facility.
A final area touched upon in our interview was the state of professional education within supply chain management. This, according to Derry, is a question he often receives. He noted that the responsibilities and scope of procurement are changing rather rapidly and there is a need to constantly stay current. To be effective, procurement professionals need to understand the broader capabilities of the supply chain such as planning, logistics and transportation. A procurement professional does not necessarily need to be an overall expert, but should be knowledgeable to the needed capabilities and impacts of decisions across the entire supply chain.
Looking across all of the current professional organizations that umbrella supply chain management today, Derry observed that ostensibly, from an ISM perspective, the strategy is somewhat different than counterparts around the globe. To be effective in the role, there is a need to understand the elements of materials management, warehousing and logistics operations, not necessarily to be an expert with every one of these areas. He described ISM’s goals as concentrating on the skill and expert knowledge needs for procurement leadership and practioners to be most effective, which is slightly different than organizations striving to serve education needs in the end-to-end supply chain. ISM is deliberately striving not to replicate efforts of other professional bodies and organizations.
We thoroughly enjoyed our conversation with CEO Derry and wish ISM continued success in the next century for serving the professional development and services needs of supply management professionals across the globe.
We had all good intentions for attending this year’s ISM conference but unfortunately, other business commitments will preclude our attending. However, stay tuned for coverage of announcements.
Bob Ferrari, Executive Editor
A posting on Strategy and Business (S+B) (formerly Booz and Company) portal, Demand Growing for Supply Chain Execs, has drawn some mixed views and/or headlines among supply chain media outlets. The commentary itself reinforces the good news, and sometime, not- so-good news that this author often reminds audiences about. In this Supply Chain Matters commentary, we weigh-in with our own observations and insights regarding study takeaways.
The good news that is communicated by S+B are statements that supply chain management has become of crucial concern to multinational firms. As we often remind our readers, there is not a week that goes by without business media news directly related to any firm’s supply chain management strategies and/or developments. The article further reinforces evidence that more senior executives have keen awareness and/or backgrounds within the broad tenets of supply chain management. We have pointed out in our postings, senior executives and yes, CEO’s from firms such as Apple, BMW, General Motors, McCormack Foods and others that came through the ranks of manufacturing, operations and supply chain management.
The not so good news is portrayed by a reference to a recent study conducted by Swiss Federal Institute of Technology, which is billed as to document the presence and impact of supply chain managers on large U.S. firms. More specifically, the study’s conclusion is that studied firm’s that have a Chief Supply Chain Officer (CSCO), have posted lower operating profit margins than those without one. This was the basis of mixed reactions among supply chain media.
This author will state up-front that I have not had the opportunity to review in-detail, the referenced Swiss Institute study. However, we do feel compelled to also weigh-in.
The S+B commentary clarifies that about three-fourths of the firms surveyed in the Swiss Federal Institute study had no top manager directly responsible for supply chain management. Further noted was that the percentage of high-level officers with supply chain management backgrounds is “exceedingly low”, accounting for less than 3 percent of top executives. Thus, by our view, any conclusion that firm’s with CSCO’s posted lower operating margins is not all that meaningful, since the majority of firms surveyed had no senior supply chain management leadership influence among the top ranks.
The commentary however, makes a more pertinent observation:
“It could be that firms with especially low performance and earnings tend to be the ones that need to install a CSCO in a bid to restructure operations, slash costs, and lays the groundwork for better future returns. Perhaps firms that are doing well simply have less impetus to alter the status quo.”
In other words, executives granted the broadest end-to-end supply chain leadership and accountability have certain mandates to address existing value-chain challenges and to improve business outcomes.
By the lens of Supply Chain Matters, that is the real takeaway message, namely that effective supply chain management is indeed crucial for today’s manufacturers, retailers and service providers and that the accountability for required business outcomes now jointly rests with senior supply chain executives and their other top management peers. We are transitioning from an era of measures of Key Performance Indicators (KPI’s) to those related to Key Business Outcomes Indicators (KBO’s).
The sub-headline, “There’s value in elevating supply chain management to the domain of the top management team”, is really the main headline, and should be viewed as such.
Supply chain management leaders and their teams now have the opportunity to directly impact business and bottom-line results, each and every day, and that is good news.
In prior commentaries Supply Chain Matters has amplified the growing talent gaps that are today impacting multiple industry supply chains. As more baby boomers reach retirement age, supply chain and procurement executives are looking with trepidation at a looming talent gap. The industry needs an influx of fresh faces, especially professionals drawn from the Millennial generation — people born between 1982 and the early 2000’s.
In May of 2014, The Institute for Supply Management (ISM) and ThomasNet jointly sponsored initiative titled the 30 Under 30 Rising Supply Chain Stars Program. The stated goal of this joint initiative was to advance the future of the supply chain profession thru recognition of up and coming professionals making significant contributions within multi-industry procurement roles. Current procurement professionals are invited to nominate outstanding practitioners, 30 years old or younger, for broader recognition. A selection committee in-turn evaluates the nominations to select 30 rising stars.
Supply Chain Matters recently had the opportunity to speak Linda Rigano, Executive Director, Media Relations at ThomasNet, and M.L. Peck, Senior Vice President, Programs and Product Development at ISM regarding this program, which this social media publication whole-heartedly supports.
Our discussion touched on a number of perspectives. Regarding the motivations and goals for the program the Annual Industry Barometer research conducted by ThomasNet indicated a high percentage of Baby Boomer age employees among manufacturers with an estimated one-third expected to retire in next few years. Of those planning to retire, one-third indicated no awareness to a succession plan. The study than ascertained what percentage of the manufacturing workforce was of Millennial age, and that turned out to be less than 20 percent. Digging deeper, there was indication that effort to recruit more Millennials seemed to be lacking. More disturbing were indications of negative perceptions among older workers regarding Millennials and their potential contribution to the organization. Another perception was that younger workers were not interested or attracted to a career in either procurement or supply chain management. That led to the joint discussion of what could be done to make a difference and provide broader visibility to the talents and achievements of up and coming professionals in supply chain management. The pilot effort began in January of last year with over 200 nominations received among multiple industry settings by July. The review committee than elected the 30 super stars who were invited to the ISM Annual Conference to be recognized for their achievements.
Regarding impressions of this program thus far, both Linda Rigano and M.L. Peck cited the caliber of nominees, their desire to learn more, do volunteer work and the ability to form teams to discuss what needs to get done, and collaborate in further effort. Nearly three-quarters were female, married and raising families. Many want to lead and make a difference in their roles and in their careers. These are all important traits to understand. Linda indicated that this was the most rewarding project she has worked upon. Further noted is that ISM members and local chapters have embraced the program, providing local receptions for the winners, and promoting their efforts and achievements. One of last year’s winners has become the second youngest President of a local ISM chapter.
What was also mentioned was the critical importance of mentoring and coaching. Most of last year’s Stars nominated have expressed the value of having coaches and/or mentors.
At this year’s Annual ISM Conference scheduled for May 3-6 in Phoenix, the 2015 Stars will be announced and provided recognition. For additional background and information regarding last year’s 30 Under 30 Rising Supply Chain Stars, our readers can review a recent ISM Inside Supply Management article profiling this program and how to get involved. For our part, we will continue to profile cited young professionals and rising stars on this blog, including those recognized by ISM.
A final takeaway for our Supply Chain Matters readers is that the challenge of recruiting, mentoring and retaining needed supply chain talent is being embraced by most all supply chain focused professional organizations. Millennials are indeed the future of new talent entering our community. In addition to the ISM initiative, both the Association of Operations Management (APICS) and the Council of Supply Chain Management Professionals (CSCMP) have ongoing initiatives, programs and activities directed at talent management and attracting new talent of all ages.
Get involved, be active and be supportive. Mentor and coach the leaders of tomorrow.
A Sudden CEO Leadership Change at Honda and Another Reinforcement of the New Product and Operations Grounded CEO
In the wake of continued challenges involving quality glitches and mass product recalls, Honda Motor Company announced today that is current CEO will step-down in June to make way for a new breed of leadership.
Takahiro Hachigo, a trained engineer and currently a managing officer within China, will replace Takanobu Ito as president and CEO in late June. Mr. Ito has led Honda since 2009, at the height of the global recession.
According to reporting from The Wall Street Journal, this executive leadership change comes at a critical juncture for Honda, which is being challenged by Nissan Motor for the number three brand leadership for the U.S. market, and amid continued product recall actions involving airbag inflators produced by supplier Takata Corporation. Honda has been one of the brands most affected by the defective airbag inflator quality crisis, and in October, top executives took on salary cuts to demonstrate responsibility for quality problems.
Reportedly, company insiders were taken by surprise by the timing of this announcement, and the choice of a younger executive promoted over those executives expected to be considered as the next Honda CEO. The global auto company further indicated that several directors who ranked higher than Mr. Hachingo would retire. In a released statement, Mr. Ito stated: “Honda is ready to make a new leap forward. To do this, Honda needs to be led by a new, younger team.”
Mr. Hachigo’s experience includes stints in product design, production operations, and procurement, which provides yet another example of a trend for new senior management appointments involving executives with product and supply chain management prowess. According to Honda’s announcement, Mr. Hachigo’s previous experience includes roles as a vice-president of Honda Motor Technology- China, representative of development, purchasing and production- China, president and director of R&D in Europe, general manager of the Suzuka manufacturing facility production operations , general manager of purchasing and vice-president of R&D in the Americas.
This resume adds further evidence of the new importance of global-based experience, including operational experience within China.
In December of 2014, BMW appointed new replacement CEO Harold Kruger, with a background in operations, engineering and manufacturing. A year earlier, General Motors rocked the global automotive industry by appointing the first ever female CEO, Mary Barra, who had risen through the GM ranks in roles in manufacturing, engineering, product design and other leadership positions. Mrs. Barra has since experienced a baptism of fire involved in GM’s massive product recall incidents.
This trend extends beyond the automotive industry, with product management and supply chain experience in the current CEO’s of Apple, Home Depot, McCormack Foods and other firms large and small.
There is an adage that one data point is interesting, two consistent data points are more interesting and three or more consistent data points is obviously a sign of a trend. For the global automotive industry, the new trend for senior management is showing a common denominator for sensitivity and grounding in product design, operations and global supply chain management leadership.
The year 2015 may well be a watershed year as this new generation of product design and operations background CEO’s continue to take the leadership helm. For global supply chain ecosystems across the automotive industry, these are, by our Supply Chain Matters lens, encouraging signs.
© 2015, The Ferrari Consulting and Research Group LLC and the Supply Chain Matters blog. All rights reserved.
This author had the opportunity to once again attend the annual MIT Research Expo held on the MIT campus in Cambridge Massachusetts and was once again blown away with the depth and caliper of student research projects focused on timely issues in supply chain management.
Every January, master degree candidates from SCALE (MIT Global Supply Chain and Logistics Excellence Network) come together in this event to share their group research projects. Student teams present their projects that deal with current industry supply chain challenges in an electronic poster, along with team-based evidence and conclusions. Attendees can circulate among the various student projects to meet individual students as well as learn about their research projects. I was especially impressed this year with the number of projects focusing on elements of supply chain risk and risk mitigation.
MIT faculty advisors invite supply chain program alumni as well as coordinate with supply chain focused professional organizations such as local APICS, CSCMP and ISM chapters to attend this Expo and potentially recruit future graduates. Not only is this a great event for students to present their academic and research depth, but also a fabulous networking opportunity to mingle with various industry supply chain professionals. These students indeed represented the future leaders of industry supply chain organizations.
This year’s Research Expo winners were:
The Perfect Promotion from Asen Kalenderski and Satya Sanivarapu, Master of Engineering in Logistics program, MIT Center for Transportation and Logistics.
Best Posters Each Global Center:
Financial Impact on Demand Forecasting Decisions, Alejandra Acevedo, MIT Graduate Certificate in Logistics and Supply Chain Management, Center for Latin-American Logistics Innovation, Bogota Columbia.
Costs and Benefits of Order Flexibility, Arun Param and Da Chin Lim, MIT Malaysia Master of Science in Supply Chain Management, Malaysia Institute of Supply Chain Innovation, Shah Alam Malaysia.
Strategic Sourcing in Uncertain Environments, Hugo Hotte and Sharad Vaish, MIT Zaragoza Master of Engineering in Logistics and Supply Chain Management, Zaragoza Logistics Center, Zaragoza Spain.
We at Supply Chain Matters extend our best wishes and well-done to all of the student participants in the 2015 Research Expo event.
Bob Ferrari, Executive Editor