From the pages of Supply Chain Management Review
The Emerging Supply Chain Management Profession
By John Dischinger, David J. Closs, Eileen McCulloch, Cheri Speier, William Grenoble, and Donna Marshall — 1/1/2006
Over the past several years, the visibility of supply chain management as a collection of diverse, critical skills has increased substantially. Supply chain management (SCM) has evolved from a loose affiliation among functions—such as purchasing, manufacturing, and logistics—to an integrated and cross-functional discipline. Consistent with this evolution, an increasing number of educational institutions are offering supply chain management degrees. Similarly, many professional organizations are modifying their names and broadening their charters to cover the full spectrum of supply chain activities.
When it comes to career progression and human resource management, however, most firms continue to focus on individual functions. A more formalized characterization of the SCM profession is obviously needed. Continued progress requires a more broadly accepted definition of SCM and a definition of the requisite experiences needed to achieve professional status in this business discipline.
Toward that end, this article describes the “model” skills and experiences required to become a SCM professional. The description is based on an internal assessment of IBM human resource practices and benchmarking of these practices with other organizations. (At the end of this article, we include a case study of IBM’s successful approach to developing supply chain management professionals.) Our research indicates that integrated SCM has evolved to the point that individuals working in this field need to have career guidance to achieve the level of a “supply chain professional.”
The needed definitions will help the supply chain community—in particular, practitioners and the organizations in which they work, trade and professional associations, and academic institutions—to develop and apply a common set of educational and experiential requirements for professional development. Our discussion establishes why a formal SCM profession should be recognized, explains the value proposition of this profession across four key dimensions, identifies the core skills and capabilities needed, and sets a “call to action” for industry, associations, and academia.
Defining the Profession
Prior to characterizing a supply chain professional, it is necessary to define the SCM profession. The Council of Supply Chain Management Professionals (CSCMP) provides the following definition:
Supply chain management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers. In essence, supply chain management integrates supply and demand management within and across companies.
This integrated view of the supply chain has evolved over many decades. The roots of this perspective date back to the early 1960s when transportation managers and researchers realized that transportation decisions affect other activities of the firm, particularly inventory management and production. The emerging concept of logistics management demonstrated that companies could trade-off functional costs. They could, for example, spend more on premium transportation to reduce inventory and, potentially, total cost.
Interest in integration heightened during the 1990s under the banner of supply chain management. While logistics was traditionally viewed as an individual function focused on distributing finished goods to customers, high-performance supply chain management required that logistics also coordinate with inbound supply to minimize congestion and maximize utilization. Supply chain management affected other parts of the firm as well. Manufacturing, for example, was no longer viewed as a separate function but as a value creation process in the larger supply chain context. SCM focused on breaking down functional silos to create integrated processes. Firms embraced a total systems approach to facilitate coordination internally and with supply chain partners, often using enhanced communication and information technologies.
The desire for increased integration also was evident in the actions of professional associations and universities. CSCMP was originally founded in 1963 as the National Council of Physical Distribution Management. As the value of functional integration became increasingly evident, the association changed its name first to the Council of Logistics Management in 1985 and more recently to the Council of Supply Chain Management Professionals in 2005. Other organizations have undergone similar transformations replacing a narrow, functional focus with a broader, integrated supply chain perspective. Two examples are the Institute for Supply Management (ISM) (formerly the National Association of Purchasing Managers) and APICS-the Association for Operations Management (formerly the American Production and Inventory Control Society). In addition, new associations have been formed. One prominent example is the Supply-Chain Council, whose mission is to define critical processes, practices, and metrics in the supply chain.
Finally, universities have also participated in this evolution. For example, all four institutions participating in this research initiative (Arizona State, Michigan State, Penn State, and University College, Dublin) have refined their academic and research programs to offer students an integrated supply chain perspective.
Roles, Responsibilities, and Skill Sets
How should we define the ideal supply chain management professional? What is the role of this professional? What responsibilities should he or she have? How might supply chain professionals be utilized within a corporation’s supply chain, and what skills and experiences should they have at their disposal?
First and foremost, a SCM professional should have experience in multiple supply chain functions and must be able to lead the design, implementation, and management of cross-functional supply chain solutions. While these solutions could be completely internal, they generally extend outside of the enterprise and involve multiple tiers of suppliers and customers. These solutions require the integration and coordination of multiple processes including:
- Product/service development launch.
- Supplier relationship collaboration.
- Manufacturing customization.
- Demand planning responsiveness.
- Order fulfillment/service delivery.
- Customer relationship collaboration.
- Life cycle support.
- Reverse logistics.
At a senior level, a SCM professional evaluates the trade-offs between supply chain functions and organizations. To effectively identify and evaluate these trade-offs, he or she must blend sufficient depth of functional knowledge with the understanding of cross-functional and cross-organizational collaboration. For example, a SCM professional must be able to balance customer service and quality with total supply chain costs. To perform this balancing act successfully, the professional must consider all of the supply chain planning, management, and measurement activities involved in purchasing, manufacturing, and logistics management. Importantly, this assessment includes products, services and solutions, and related information.
In addition to identifying the trade-offs, the supply chain manager must be capable of developing and implementing integrated and comprehensive supply chain solutions. Innovative, end-to-end supply chain solutions will need to be implemented on a broad business scale-across the enterprise on a global basis.
The professional also needs to disseminate knowledge that will help their supply chain partners more effectively design and manage their own supply chains. They also should be able to apply the principles and methodologies of SCM to other parts of the organization and define enterprise-level architecture for complex solutions. In essence, they need to be supply chain consultants. Finally, the professional must be able to analyze the business performance of their supply chains to facilitate sustainable competitive advantage.
The SCM professional needs to develop the skills and capabilities to operate effectively in this context. Developing the right skills and knowledge can enhance not only supply chain performance, but also enterprise performance. Supply chain managers can no longer rely solely on the focused functional skills of the past to ensure a bright future. Instead, they need to develop cross-functional management skills that must be integrated and aligned with the company’s overall business strategies. In many cases, this will require a redefinition of the skills, roles, and responsibilities of the supply chain professional. It is apparent that a variety of skills are needed to manage the complexity and uncertainty inherent in SCM. Furthermore, supply chain managers need to be open to continual learning as today’s supply chain skills may not maintain relevance for the future.
The importance of possessing the right supply chain skills is underscored by Myers et al. (2004).1 Their study demonstrates that a supply chain manager’s experience and education does not predict work performance; instead job skills predict success. Therefore, it is important to provide aspiring SCM professionals with the appropriate opportunities and guidance to develop the job skills that will enhance their potential for success.
While researchers and practitioners alike are calling for the development of the SCM profession, there is some disagreement over how this process will evolve. Most agree that context-independent skills are important for supply chain professionals. These include broader managerial capabilities such as people skills, social skills, coordination, change management, communication, decision-making skills, problem-solving skills, time management, and cultural skills.
There is some disagreement, however, regarding technical and technological skills. Some researchers have suggested that the SCM profession should not include technical or technological skills. Others consider such skills to be fundamental for developing cross-functional, cross-company managerial competencies. Some experts place special emphasis on IT skills and expertise. From the literature, however, it is clear that researchers are not advocating deep technical or technological skills. The consensus seems to be that supply chain professionals not only must be competent in their technical expertise but also must possess more general skills that are context-independent and can cut across boundaries of function and organization.
After reviewing the literature and conducting our own interviews and discussions, we believe that a true SCM professional must have skills and capabilities in the following five areas: functional, technical, leadership, global management, and experience and credibility.
Functional Skills. A SCM professional should have established subject-matter expertise and relevant skills in several of the major supply chain functions including procurement, demand/supply planning, manufacturing, global logistics, and customer fulfillment. The individual will have worked at the operational level in multiple functions to fully understand the day-to-day processes, challenges, and issues. This experience should include a combination of hands-on operational and managerial work.
Technical skills. Given the increasing dependence of the supply chain on technology, a true SCM professional must have experience in applying information technology (IT) effectively. This does not suggest that a SCM professional must be experienced in technology development. He or she should, however, have dealt with the challenges of technology selection, implementation, and application. A well-developed understanding of the relationship between supply chain processes and execution management solutions is part of this skill set as well.
Leadership skills. A SCM professional must demonstrate a broad range of leadership capabilities. He or she must be able to lead projects involving customers, partners, and/or competitors while effectively interacting with both internal and external executives. A SCM professional also must demonstrate leadership and experience in complex, matrixed business environments. This experience will ensure that supply chain initiatives and resources are managed and integrated effectively. Other broad leadership skills relate to communication, negotiation, problem solving, team leadership, and project management
Global Management. In today’s boundary-spanning supply chain environment, a SCM professional must have global planning and operations experience. This experience provides the insight into the global supply chain environment and its challenges. Ideally, professionals will have had one or two experiences working outside of their home country. The next best thing is to have extensive involvement in and responsibility for global planning and operations.
Experience and Credibility. A SCM professional must possess sufficient knowledge, breadth, and experience to evaluate the competitive environment, to conceptualize strategy, to assess and organize solutions, and to implement change both in the organization and with supply chain partners. This capability is achieved by developing experience and credibility both within the enterprise and externally. External credibility can be achieved through a variety of activities, such as participation in industry conferences and associations, receiving awards and patents, and publication in business/professional journals.
Call to Action
Current research indicates that the widely accepted traditional model for executive career paths, originally identified in 1956 by William H. Whyte in Organization Man, is changing. Whyte’s model suggested that top leaders have a university education (ideally from an Ivy League school) and internal training as they climbed to the top executive level as a lifelong employee of their company. Cappelli and Hamori, however, recently completed a study that compares Fortune 100 executives from 1980 with their counterparts in 2001.2 The researchers determined that today’s top executives are younger and more gender diverse. They generally were promoted faster, worked for multiple companies, and were less likely to have worked in the manufacturing industry. Finally, these men and women increasingly hold an advanced degree (primarily in business or law) but fewer of these degrees come from Ivy League schools. Talent acquisition, promotion, and executive development in this context require a fresh look at the traditional human resource processes.
In a similar manner, SCM professional development will proceed differently today than it did in the past. As a result, human resources and supply chain departments will need to collaborate more and change their expectations regarding the source of future talent. The solid lines in Exhibit 1 illustrate what a typical career path looked like in the past. Talent often rose through the ranks in one of the single functional areas of demand/supply planning, procurement, manufacturing, logistics, or fulfillment. While the resulting individuals were thoroughly grounded in their functions, they did not always understand the integrated processes or the functional trade-offs. The dotted lines in Exhibit 1 illustrate the cross-functional career path necessary to develop today’s supply chain professional. (The IBM case study at the end of this article will offer further illustrations.)
As organizational levels become flatter and holistic business skills become more important for supply chain professionals, companies will need to provide different training models. Certifications, for example, are particularly useful for a workforce without formal supply chain training. The certification process also may broaden the skill sets of mid-level managers who have earned university degrees in SCM. In addition, continuous education programs can expose supply chain managers to changes in technology while challenging their acceptance of current industry paradigms. To maximize the value of these types of programs, companies will need to develop strategic relationships with educational institutions.
Now is the time for businesses, professional organizations, and educational institutions to identify the new knowledge and skill sets SCM professionals need. Companies and professional organizations could develop the criteria and guidelines independently; yet this approach would result in confusing and inconsistent definitions. A better approach is to define standards that are recognized and applicable across companies and geographic locations. The professional organizations (APICS, CSCMP and ISM) are moving toward standardization through various types of certification. But certification examinations alone tend to employ multiple choice tests that emphasize tactical functional knowledge. As emphasized throughout this article, a true supply chain professional requires both the breadth of experience and ability to integrate—neither of which can be evaluated through multiple choice examinations.
To develop a strong supply chain organization, companies must take on the daunting task of identifying new talent and training their professionals to meet needs that in some cases are as-yet unidentified. They also need to perform effective succession planning that allows them to retain and develop their key investments.
Companies with the most successful and competitive supply chains recognize that technical knowledge and training by themselves are insufficient. SCM professionals must be able to meet the rapid changes of a global economy that demands greater connectivity across companies and geographies and the use of rapidly evolving technologies. They must also have a greater breadth of knowledge in other functional areas and must possess enhanced leadership and communication skills to enable them to become an adaptable resource and ensure competitive advantage into the future. The following case example illustrates how supply chain leader IBM is meeting this challenge.
Depth and Breadth in the On-Demand Supply Chain
A Case study on IBM
IBM developed the supply chain professional career path in support of its evolving view of the supply chain itself. Specifically, IBM is transforming its supply chain into one that is on-demand. An on-demand supply chain is integrated end-to-end across the company’s entire operations and with key partners, suppliers, and clients. It can sense and respond with flexibility and speed to any client demand, market opportunity or change in the marketplace—no matter how frequent or sudden. The on-demand supply chain leads to competitive advantages than enable the company to gain market share, boost client satisfaction, and effectively adapt to any changes in the market
As part of this transformation, IBM is developing talent that has deep functional expertise in such areas as procurement and logistics as well as cross-functional breadth. Here is the IBM story.
History of IBM’s Supply Chain
Previously, IBM’s supply chain was fragmented into several individual business units. Supply chain operations consisted of the unconnected activities of negotiating contracts; procuring parts; transporting them to manufacturing; loading them onto planes, trains, trucks, and ships; and then shipping them to clients’ loading docks on time. In general, the company viewed its supply chain as a cost of doing business, rather than a strategic weapon.
In the late 1990s, IBM changed its perspective on supply chain management. Instead of looking at it as just overhead, the company considered how the supply chain could provide value to the enterprise and its shareholders. To begin, IBM’s goal was—and still is—to revolutionize the very concept of a supply chain by transforming it into a powerful force that could drive efficiency, make life easier for its clients, and improve customer satisfaction with IBM as a strategic partner. If that could be achieved, IBM believed that it could grow revenue while reducing expenses. Of course, this meant dramatically improving operations. It also meant making the supply chain accountable to the business and establishing fundamentally different expectations of how the supply chain produces benefits.
To achieve this goal, IBM in 2002 created a single business unit called the Integrated Supply Chain (ISC). Overnight, the ISC emerged with 19,000 employees in 56 countries responsible for $40 billion in spending. Exhibit 2 illustrates the ISC organizational structure. The goal of the ISC was to build a supply chain that stretched from “opportunity to cash” —meaning from the raw materials at one end of the manufacturing operation to the ongoing support it provided for clients at the other. Importantly, ISC would collaborate with every aspect of IBM to play an active role in aligning and integrating the company horizontally.
The philosophy was simple: A supply chain is greater than the sum of its parts. IBM focused not only on preserving and enhancing functional excellence but also on creating the capability to see, understand, and leverage the interdependencies across the entire supply chain. IBM’s approach to managing the supply chain allows it to do both.
For one thing, IBM didn’t disband the supply chain silos because it would continue to need experts with deep knowledge and experience in each area of the supply chain. Yet IBM also needed visibility across the supply chain. To develop this capability, the company formed three teams to manage issues cross-functionally in the areas of operations, strategy, and talent development. This management approach helped IBM make decisions faster, better, and more consistently across the supply chain.
To reinforce enterprise collaboration, changes were made to the measurement system. IBM previously measured execution solely within the supply chain business functions, such as logistics and procurement. If logistics met its commitments, the logistics team was happy. Today, the entire ISC must achieve integrated goals such as meeting or exceeding customer expectations when completing orders. In other words, the traditional methods of evaluating performance, such as time to market, were no longer sufficient. IBM also needed to capture critical quantitative data across and between functions as well as qualitative insight into their supplier and partner relationships. IBM adapted its measurement system to support the dynamics of a truly end-to-end operation.
By now, there’s no doubt that the supply chain will continue to be a driving force in the business. As a result of the management and measurement changes, IBM’s inventory is at the lowest it’s been in more than 30 years. Further, the ISC reduced supply chain expenses by nearly $300 million in 2004. The reduced assets and expenses provided cash that could be used for acquisitions to make IBM more competitive. In addition, the IBM sales team opened up about 25 percent of their time to uncover new client opportunities because of reduced time required to follow-up on orders.
Career Path Skills
In the process of establishing this highly integrated organization, a clear need emerged for a talent pool with the breadth and depth of knowledge and experiences across the on-demand supply chain. Supply chain career advancement had traditionally been handled within each of the functional/process areas (for example, procurement, logistics, manufacturing, fulfillment, and demand/supply planning). This model worked to develop subject-matter expertise. And while this in-depth expertise continues to be critical to the business, IBM’s supply chain professionals today also require a broad understanding of the entire supply chain in order to design, develop, and deploy integrated solutions.
To address this need, IBM created a formal supply chain management (SCM) career path targeted at consistently high-performing employees and managers who seek to learn and apply broad, cross-functional supply chain expertise and want to be recognized as “supply chain management professionals.” These professionals work to optimize performance and drive innovation across the entire supply chain—from addressing initial solution requirements through post-installation support. The following outlines the key objectives of the SCM program and relates the experiences of IBM supply chain professionals who are succeeding in this new environment.
1. Broaden Employees’ Careers
The SCM career path encourages and facilitates opportunities to develop a breadth of skills through cross-functional movement and experiences. A related benefit is the development of a community of SCM professionals for critical internal supply chain tasks and external customer engagements.
Kim Ford, IBM Manager. Since she started with IBM nearly seven years ago, Kim has held several postions in procurement and currently works in manufacturing.
“Increasingly, there’s a need for people with a broad set of skills across multiple dimensions in supply chain management. Our competitive advantage comes from our collective supply chain experience; the stronger and more informed we are as individuals, the better equipped we are to offer new and innovative solutions to the business and to our clients.”
2. Drive Culture Change
The career path development provides a framework for challenging existing silo thinking through cross-functional assignments and responsibilities. It promotes cross-functional innovation and collaboration, and eventually develops a SCM leadership pipeline.
Dan Carrell, IBM Executive. In his seven years with IBM, Dan has worked in logistics and with the management teams of global procurement.
“My experiences have helped me develop a deeper understanding of the Integrated Supply Chain and a strong network of colleagues with whom to share ideas and seek input. Making the right connections brings our work back to a personal level. The more comfortable we are reaching out to our extended team, the easier it will be for us to optimize our collective efforts.”
3. Promote End-to-End Thinking
Because of SCM’s natural cross-functional focus, the career program encourages end-to-end thinking and fosters innovative solutions to supply chain challenges. IBM’s supply chain professionals can serve as a “resource pool” beyond ISC for all of the organization where end-to-end process management and cross-functional planning skills are critical.
Jean-Luc Perret, IBM France Manager. Jean-Luc has worked in several IBM business units and most areas of the supply chain during his 34 years at IBM.
“I’ve seen the evolution of our organization. Moving around has afforded me the luxury of experience and credibility. I recognize both the strengths and limitations of many of the functions and can examine issues, identify problems, and consider downstream implications pretty quickly…
“To be on demand, we must approach problems and opportunities more consistently throughout the organization. It’s a matter of striking the right balance. If we cultivate a spirit of cooperation between employees with broader supply chain knowledge and those with traditional functional expertise, the possibilities are endless.”
4. Improve Client Satisfaction
With the development of the SCM professional, customers will have access to cross functionally experienced practitioners in addition to the existing functional experts.
Denise Amendola, IBM Executive. Denise has been with IBM for 21 years, starting in programming and progressing through a variety of supply chain-related assignments.
“When I started at IBM, we didn’t have to look over our shoulder much—we were our own competition, [because we] focused primarily on technology and our products. Things like on-time delivery and how we communicated with clients weren’t as important. Now, our success hinges on the total client experience. That means being on top of everything and taking nothing for granted.”
1 Myers, M.B., Griffith, D.A., Daugherty, P.J., and Lusch, R.F. (2004), “Maximizing the Human Capital Equation in Logistics: Education, Experience, and Skills,” Journal of Business Logistics, 25(1), pp. 211-232.
2 The Path to the Top: Changes in the Attributes and Careers of Corporate Executives, 1980-2001, Peter Cappelli and Monika Hamori, May 2004, National Bureau of Economic Research, http://www.nber.org/papers/w10507. © 2006, Reed Business Information, a division of Reed Elsevier Inc.