Included in our 2017 Predictions for Industry and Global Supply Chains (Available for complimentary downloading in our Supply Chain Matters Research Center), there are two specific predictions that will directly impact various industry supply chain sourcing and procurement professionals in the coming months.
We predict that the role of the Chief Procurement Officer (CPO) will continue to evolve in 2017, with an emphasis towards strategic advisor skills. That will likely include analyzing the impacts to a rapidly changing global supply chain sourcing picture, added supply chain risk factors, and needs for higher levels of joint innovation from suppliers. A challenge for sourcing teams among U.S. based manufacturing, retail, or services firms will be educating senior management on the implications of any potential tariffs, import taxes or trade barriers brought about by the new Trump Administration and a Republican Party dominated U.S. Congress. In prior blog commentaries, we have advised teams to be prepared for a year of continual supply chain analysis and scenario-based planning exercises. We brought reinforcement to messages and advisory actions from strategic consulting firm KPMG and contract manufacturing services provider Flex indicating that planning scenarios are already underway among various industry sectors, all trying to more precisely determine impacts to business margins, product strategies, or existing and future component or finished goods manufacturing strategies.
We declared that one of the most significant challenges in 2017 will be in procurement skills development and filling-in skill gaps as procurement’s role moves deeper toward a strategic advisory role. Increasingly, a fully integrated strategic sourcing and procurement process will become necessary and that will likely require augmented investments in technology and associated team skills beyond singular procurement business processes. The function will be called upon to broaden collaboration and decision analysis efforts with product management and key global and domestic suppliers. Initiatives directed toward regulatory compliance changes, ongoing supply chain sustainability initiatives and changing contracted indirect services needs will require teams to increase collaboration efforts with other supply chain and business functions.
This challenge is not confined solely to procurement but across many other manufacturing, supply chain, IT, and product management areas. So much so that we have included Prediction Three- A Supply Chain Talent Perfect Storm within our ten 2017 predictions.
The Institute for Supply Management (ISM) serves as the principal professional organization for procurement. In March of 2016, we had the opportunity to interview Tom Derry, CEO of ISM. Regarding the topic of skills development, the following was stated:
“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.”
In just about two months, ISM will be conducting its annual 2017 conference which will be held May 21-24, 2017 at the Disney Coronado Resort in Orlando Florida.
Featured keynote speakers will include former UK Prime Minister David Cameron, and former Chairman of the Joint Chiefs of Staff, General Colin L. Powell, USA (Ret.). The agenda notes that Mr. Cameron promises to deliver a riveting and eye-opening firsthand account of his own experiences during his tenure as Prime Minister, including lead-up to the Brexit decision. That will include his unique perspective on current geopolitical and public policy issues, many of which impact global business and the supply chain. He will further address a range of events in Europe and worldwide, and what they could mean to procurement professionals. General Powell will speak to armed conflict-the ultimate challenge to supply and logistics, as well as the leadership traits included in his recent book: It Worked for me In Life and Leadership.
A total of 73 sessions will be offered based on various skill development levels ranging from fundamental to mastery level. Learning tracts include Economic, Business and Professional segments along with various Experience segments including the very successful Emerging Professionals Experience sessions. This author and supply chain industry analyst had the opportunity to attend last year’s ISM 2016 annual conference and the sessions I sat in were very educational and insightful. Two subsequent prior Supply Chain Matters postings highlighted a fascinating session: What Private Equity Expects from Sourcing Leaders, and highlights of interviews with ISM CEO Dom Derry and others on changing procurement skill needs.
Please consider joining me in attending ISM 2017. The full agenda and registration information for the ISM 2017 Annual Conference can be obtained by clicking on this dedicated ISM 2017 conference web site link or by clicking on the conference logo appearing in our Upcoming Conferences panel to the right.
Supply Chain Matters readers should take note that ISM is currently offering a $400 registration discount if registration is completed by March 30, so consider acting sooner than later.
© Copyright 2017. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.
This week, The Council of Supply Chain Management Professionals (CSCMP) with the collaboration of A.T. Kearney, published its 27th Annual State of Logistics Report©. As has been our annual custom, Supply Chain Matters provides our initial impressions of this year’s report.
Before we begin, let’s take a step back.
For the past several years, we have raised a number of concerns and added perspectives regarding the state and overall costs of logistics across the United States. Our chosen editorial commentaries reflecting on the 2012 thru 2014 reports expressed concerns towards a continued trend for increased logistics, transportation and inventory costs and in 2014, we again cited our growing concerns regarding cost and service trends. Regarding the 2015 report, our headline takeaway moved toward action, indicating that industry supply chain teams required to take attentiveness to the implications of what was occurring in various logistics and transportation channels.
We quote one of our Supply Chain Matters key takeaways from last year’s report:
“With the latest (2015) report, we believe that industry supply chain teams to move beyond industry media spin. Pay close attention to the concerning industry trends and their implications, and act proactively to continuing logistics challenges that could prove costly.”
Similarly in our annual predictions for industry supply chains published prior to the beginning of every New Year, we have continually raised awareness to increasing forms of ongoing disruption occurring in various logistics and transportation sectors.
This year’s report was compiled by a different research partner, AT Kearney. Thankfully, the current report authors are finally acknowledging that change is occurring, with the main theme being- Logistics is in Transition. Other sub-headlines and takeaways in this year’s report include:
- The logistics industry is entering a new era of disruptive forces that involve technology investments and operational constraints that will fundamentally change the rules of the game.
- Growth in the parcel and express segment continues to be fueled by the ongoing explosion in online B2C E-commence and Omni-channel retail growth.
- Overcapacity and buyer’s market state conditions continuing in the ocean container, air freight and now the U.S. rail segments.
- Technology continuing to play a key role in the future transformation of the 3PL industry.
Regarding that latter headline, the CSCMP sponsored report indicates:
“The pace and breakthrough nature of technological innovation- and the rate of which it is adopted- will heavily impact supply chain assets, processes and people.”
A further perspective we urge are multi-industry supply chain readers to dwell upon is that according to this latest report, while business inventory growth flattened in 2015, it was countered by a 42 basis point increase in the weighted cost of capital resulting in a 5.1 percent overall increase in inventory carrying costs in 2015. Part of the explanation can be found in the Appendix section of the current report. The new authors elected to modify the calculation of inventory carrying costs because prior reports multiplied the total value of business inventories by a fixed percentage- 19 percent in prior years. The new authors elected to calculate the value by utilizing other matrices more reflecting actual values of weighted cost of capital.
The implication going forward is that pressures to add additional inventory to mitigate risk or respond to customer needs for same-day delivery will come with a stiffer financial cost beyond zero interest rate conditions.
Thus, if you chose not to consider what we have been pointing out in the last 18 months, you now have a renewed industry perspective. Therefore, we need not dwell in broader or different perspectives,, rather we urge our readers and followers to just read and absorb the report for yourself.
The latest report is available for download on the CSCMP web site. Existing CSCMP members can download the report at no-cost, while non-members must pay a publication fee.
A few added comments related to the changes in this year’s report. We applaud CSCMP and AT Kearney for the changed methodology and added internal logistics industry and external multi-industry perspectives and insights brought forward in the new format. We encourage both organizations to continue that effort in future annual reports. Previous reports featured more added color and current data points in the current year and we trust the authors will take that into effect in future reports as well.
We re-iterate our ongoing key Supply Chain Matters takeaways:
The “new normal” of logistics and transportation is reflected in strategies directed at assuring consistency of service, deeper levels of business process collaboration delivered at a competitive cost. The renewed message in the light of continuing data is to insure that the cost, service and inventory benefits derived by contracting or outsourcing logistics and transportation services outweighs the continuing pattern of increasing services costs. As supply chain processes and risk profiles continue to become more complex, especially in light of the demands of online and Omni-channel fulfillment, 3PL’s and total logistics providers will have to invest more in technology and services, adding more motivation to increase fees or institute risk sharing methodologies.
If you require another proof-point- reflect on the actions that Amazon has been taking to take more control of its logistics and transportation capabilities for premium fulfillment services. If your organization spent billions on transportation and logistics, you would probably be just as motivated.
A final note:
At this year’s annual CSCMP conference being held in late September, this author will be collaborating with The Washington Post in moderating a specific panel discussion related to ongoing logistics and transportation industry trends and how specific industry supply chain organizations are responding to these changes. Stay tuned for further details.
© 2016 The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.
Today more than ever, there are new challenges impacting procurement executives and their respective teams. In a published article appearing on Industry Week, Tom Derry, CEO of the Institute for Supply Management (ISM) addressed three of these challenges.
The first is the prevalence of security threats to corporate networks, IT applications and data. While cyber threats are an ongoing concern at just about any firm, such threats take on added significance because of the mission critical sensitivity between supply chain and procurement processes. Recent high level cyber-attacks on firms like retailer Target several years ago involved penetration via supplier portal logins. Think for a moment of the sensitive corporate information shared with suppliers related to products, production levels or quality, let alone the ability of hackers to penetrate into other corporate systems and data files from a singular point of penetration.
A second challenge is the need to build a sophisticated procurement team, one that supports the different skills required to manage today’s far more global and complex supply networks. As Supply Chain Matters has observed in our commentaries related to supply chain talent management, talent acquisition and re-skilling, experience in function is trumped by the need for a refined set of skills. Team effectiveness comes from the balancing of hard skills related to cross-functional supply chain business process and decision-making needs. Such functional skills increasingly require (1) knowledge of product design; (2) introduction and management practices, and (3) hands-on information technology and information management skills.
Hard skills are now coupled with required soft skills in areas such as win-win contract negotiations, diversity of international business cultures, supplier collaboration, plus project and team management. As Tom Derry points out, procurement has evolved from one of tactical buying to that of strategic supply management where more and more innovation and risk resides across tiers of the value-chain.
The third area on need is rightfully described as the broadening of financial acumen. Indeed, as our readers have more than likely discerned from our industry supply chain commentaries, no longer are procurement professionals policing costs but rather assisting in facilitating a number of required business outcomes: a) product innovation; b) speedier time-to-market; c) business continuity responsibilities that include avoidance of strategic supply disruption as well as managing supplier consolidation brought about by mergers or acquisition.
More and more, supply chain and procurement is gaining a direct C-level voice and accountability for results, and with that comes the need for broader and deeper financial acumen.
ISM will be conducting what is termed as the Supply Management Conference of the Year, ISM 2016, which will be held from May 15-18 in Indianapolis, Indiana. As noted in a prior Supply Chain Matters commentary, this year’s conference features some great keynote speakers, including former Ford CEO Alan Mulally. Mulally will talk about how keeping supply chain in the C-suite was critical to one of the biggest corporate turnarounds in history.
This year’s ISM2016 session tracks have been designed to directly focus on changing skill needs within procurement and supply management along with the sharing of best practices including mistakes to avoid. That includes specific sessions focusing on talent management and skills enhancement.
For more detailed information on ISM 2016 learning tracks, sessions and registration, you can visit this dedicated conference website link – ISM2016.org – or double-click on the ISM S016 Conference icon to the right.
This Executive Editor is planning on attending ISM 2016 and I look forward to interacting with our various blog readers and up and coming procurement leaders at the conference.
We wanted to remind our readers that the premier supply management conference of the year is nearing along with the opportunity for you to still obtain a 40 percent discount in registration along with a complimentary copy of Alan Mulally’s book on his experiences leading Ford. The discount offer expires on Monday of next week, so time is of the essence.
The Institute for Supply Management’s (ISM) ISM2016 conference will be held from May 15-18, 2016 in Indianapolis, Indiana at the Indiana Convention Center. The themes chosen for this year’s conference is: Proactive-Disruptive-Productive and includes a great line-up of speakers, sessions and networking opportunities.
Keynote speakers include Alan Mulally, former President and CEO of Ford Motor Company, along with former corporate lawyer and negotiations consultant Susan Cain, author of the best-selling book, Quiet: The Power of Introverts in a World That Can’t Stop Talking. Susan Schwab, former U.S. Trade Representative and current Professor of Public Policy at the University of Maryland will lead a discussion on the ISM Report on Business® and the future of the economy. Ms. Schwab was integral in the initial launch of the Trans Pacific Partnership (TPP) trade negotiations and she will further address how the TPP relates to the future of supply management.
For more detailed information on ISM 2016 learning tracks, sessions and registration, you can visit the dedicated conference website or by double clicking on the ISM 2016 conference logo appearing in the Upcoming Conferences panel of Supply Chain Matters. Be sure to utilize the promotional code: ICON16! to take advantage of the limited registration discount offer.
We wanted to make all of you aware that the Institute for Supply Management (ISM) will be conducting the Supply Management Conference of the Year, ISM2016, from May 15-18, 2016 in Indianapolis, Indiana at the Indiana Convention Center.
The themes chosen for this year’s ISM 2016 conference is: Proactive-Disruptive-Productive and includes a great line-up of speakers, sessions and networking opportunities.
Former President and CEO of Ford Motor Company, Alan Mulally, is a featured keynote speaker. Mr. Mulally will share his experiences as a dynamic change agent incorporating skills of positive attitude, team-building and business outcomes based decision-making. He will address the principles that took Ford’s supplier
relationship quality rankings from near-dead last to being close tothe top among automotive manufacturers.
Former corporate lawyer and negotiations consultant Susan Cain, author of the best-selling book, Quiet: The Power of Introverts in a World That Can’t Stop Talking, will address why introverts are capable of great achievement.
Susan Schwab, former U.S. Trade Representative and current Professor of Public Policy at the University of Maryland will lead a discussion on the ISM Report on Business® and the future of the economy. Ms. Schwab was integral in the initial launch of the Trans Pacific Partnership (TPP) trade negotiations and she will further address how the TPP relates to the future of supply management.
New this year are Customizable Experiences learning tracks that include:
The Emerging Professional– tailored for attendees with 1-8 years of work experience seeking to accelerate certification, expand professional networking and work experience opportunities.
The Corporate Executive– tailored to corporate teams of five or more supply management professionals which will include hands-on team-building sessions, exposure to future up and coming talent, and exclusive access to keynote speakers in an Exec In forum.
ISM 2016 Educational learning tracks for this year are:
Do– Concrete examples of success stories from industry leaders.
Don’t– What the opposite of supply management best practices including mistakes to avoid.
Direct– Covering a broad spectrum of issues, strategies and processes impacting direct materials spend.
Indirect– Helping to identify key characteristics of several indirect spend categories, areas of value creation, savings and other relevant metrics.
People– Insights on the tools, resources, innovations and solutions needed to enhance talent management strategies and individual career management.
Tools– Addressing tools, templates and processes for risk management, innovation, sourcing and procurement practices.
Risk– Examination of risk assessment practices, operational blind spots and gaps, vulnerabilities that pose the greatest risk.
Rewards– Exploration of rewards that can be realized from diversity, sustainability, supplier innovation and business growth.
Senior purchasing and supply executives speaking within these learning tracks include corporate names such as Becton Dickinson, Chevron, CH Robinson, Dell, DuPont, Google, IBM, McDonalds, Miller Coors, PepsiCo, Siemens, Unilever, among others.
For more detailed information on ISM 2016 learning tracks and sessions, you can visit the dedicated conference website.
There is also an incentive for early registration that attendees can take advantage of.
If you register now, you can obtain a 40 percent discount and obtain a complimentary copy of Alan Mullally’s book on his experiences leading Ford. The discount offer expires after February 29.
You can either register directly at: www.ISM2016.org or double click on the ISM 2016 Conference icon. Please include the promotional code: ICON16! to take advantage of this limited offer.