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Building on the Concept of Logistics

Building on the Concept of Logistics

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Published by Nishi Jaiswal

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Published by: Nishi Jaiswal on Oct 28, 2012
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Building on the concept of logistics, supply chain management (SCM) has become a recognizeddiscipline of increasing importance in our global economy. Competence in managing the supply chainoften affects and can determine the bottom line. But business and management programs do not produceenough people with the necessary SCM skills. As part of a leadership development program, an SCMprofessional organization has developed a model describing the competencies needed for designingSCM-related positions as well as training and educating individuals to fill them.**********Supply chain management (SCM) has been recognized by corporate business as a necessary businessfunction, and may be used for competitive advantage. The definition of SCM has evolved over the past 25years, with the concept gaining broad understanding. At the same time, corporations continue to staff SCM functions, but have not been fully satisfied with the talent available from academic institutions andtheir own development processes.Part of the problem underlying the insufficient talent pool has been a lack of defined competenciesrequired for a supply chain manager. This paper describes the development of the Supply Chain Manager Competency Model[C] after reviewing the history of SCM and current SCM education.Finally, the uses and implications of the model will be discussed.SCMThe term "supply chain management" was first introduced in a 1982 Financial Times article about anapproach being developed by Keith Oliver and other consultants at Booz Allen Hamilton (Laseter andOliver, 2003). There have been many definitions the discipline has developed, and most are similar to thefollowing "The Association for Operations Management" (2008) definition: The design, planning,execution, control, and monitoring of supply chain activities with the objective of creating net value,building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand,and measuring performance globally.The activities of SCM include the flow of raw materials to the finished product realized by end customers--and back, in the case of recycling or return. Another way to look at the activities is in terms of five major processes: buy, make, move, store, and sell (Webster, 2009).SCM may be an outgrowth of "logistics," a term denoting a functional area of responsibility dating from tothe late 17th century and the creation of the Gram mareshal de Logis, an officer charged with providinglodging and support for French troops in the field (Webster, 2009). Debate continues regarding thedifferences between the two terms. Lummus, Krumwiede, and Vokurka (2001) discuss the differences;SCM is generally thought to be the broader term.The early beginnings of the execution of a supply chain initiative can be traced to the textile's industryquick-response program and later to efficient consumer response in the grocery industry. Owing tointense, worldwide competition, leaders in the U.S. apparel industry formed the "Crafted with Pride in theUSA" Council in 1984 (Kurt Salmon Associates, Inc., 1993). In 1985, Kurt Salmon Associates wascommissioned to conduct a supply chain analysis. The results showed the total delivery time for theapparel supply chain, from raw materials to consumer, was 66 weeks long, 40 weeks of which materialsspent in warehouses or in transit. The long supply chain resulted in major losses for the industry becauseof inventory financing and not having the right product in the right place at the right time. The study
 
spurred the development of the quick response (QR) strategy. QR is a partnership where retailers andsuppliers work together to respond more quickly to consumer needs by sharing information. Significantchanges were the adoption of the universal product code (UPC) used by the grocery industry and a set of standards for electronic data interchange (EDI) among companies. Retailers began installing point of sale(POS) scanning systems to transfer sales information rapidly to distributors and manufacturers (Lummusand Vokurka, 1999).The first paper to elaborate on SCM (Houlihan, 1985) discussed changes in the economic climatecausing international firms to revaluate the structure of their supply chains. The paper addressed then-new approaches to managing international chains, including the concepts, barriers, and lessons learned.Through a study of firms in various industries, what were previously considered logistical problemsemerged as more significant issues of strategic management. As the discipline of supply chain management evolved, companies began to staff this functional area withexperienced employees with backgrounds in areas such as procurement, logistics, inventorymanagement, warehousing, and marketing. Companies also began hiring talent as universities began tooffer SCM programs.SCM Education and Career Preparation A 2006 research study (Melnyk, et al.) looked at where the SCM field was expected to be in the next four to five years. Using input from leading supply chain practitioners and academics, the study determinedthe gaps in the areas of knowledge dissemination, practice, and research to realize the expected SCMvision of this near-term future. The findings indentified six major gaps: strategic visibility and alignment;talent management and leadership; supply chain models including optimization, risk, and cost; processorientation including measures, information, and integration; relationships and trust; and supply chainarchitecture and structure.Part of the talent management and leadership gap was a microgap of talent management:There is a need to develop competency models for the types of talent that [are] needed now and into thefuture. Previous talent needs were more functional in nature, requiring training in a specific discipline.Supply chain employees are now needed who are more generalists and can integrate with variousdisciplines. Today, there is a lack of sufficient supply chain graduates and demand outstrips supply.There are insufficient ties between industry and educational institutions to foster the development of talent. Finally, there is a dearth of student (at the undergraduate, graduate and doctoral levels) andfaculty internships to provide a training ground and experience base. There are too few students whounderstand strategic SCM. There are far too few faculty [members] who can teach strategic SCM(Melnyk, Lummus, Vokurka, and Sandor, 2006).Clearly, if the expected improvements in SCM were to be achieved, better models of competencies andpartnerships between practitioners and academia would need to evolve. A report by AMR Research, Inc. (Aquino and Draper, 2008) showed that investments in the AMR supplychain top 25 would achieve investment returns (17.9% in 2007) far in excess of returns of the Dow JonesIndustrial Average in 2007 (6.4%) and the S&P 500 in 2007 (3.5%). The report found that firms faced agiant obstacle in achieving supply chain expertise: a shortage of trained SCM professionals at all levels.Based on this problem, a group formed within the Supply Chain Council, the supply chain talent academicinitiative SCTAI, to study supply chain talent management. The key findings were:
 
 * No two supply chains are alike.* Leaders view SCM as a business discipline.* Globalization has created urgency.* A common supply chain talent model is the foundation for improvement.* Universities have an opportunity to take a leadership role.Two findings seem paradoxical: the need for a common supply chain talent model and the observationthat no two supply chains are alike. A recent study of the state of supply chain education (Fawcett, 2009) found that, to meet ever-risingcustomer expectations, companies are building global networks and streamlining value-added processeswith the goals of efficiently using worldwide resources to profitably meet the needs of global consumers.However, many firms struggle to find managers capable of executing these strategies and creating valueacross organizational and national borders. One senior executive described his company's supply chainchallenge as follows: "We can find great entry-level people--the ones with strong functional skills. Butfinding people who can bring everyone together to work as a cohesive team is a real challenge. They're just not out there." His plea was for universities to create the curriculum needed to produce this type of manager. The study concluded that firms "are finding it difficult to find people with the right skills--deepfunctional know-how guided by a holistic, collaborative vision--to turn these strategies into reality"(Fawcett, 2009).To respond to this need, an industry professional organization, APICS (the Association for OperationsManagement), initiated a project to identify the competencies needed by a supply chain manager. Theproject was to be directed by the organization's board of directors and be part of a leadershipdevelopment program. The results of this project would enable companies to define their supply chainmanager requirements more clearly and enable universities to provide better programs to meet industryneeds. APICS Future Leaders Program APICS is one of several international professional organizations serving the operations and SCMprofession. With a 50-year history and 40,000 members worldwide, the organization administers twocertification programs, production and inventory management (CPIM) and supply chain professional(CSCP), that are well-respected industry standards. APICS is governed by a 17-member board. The chair is essentially a two-year progressive position (chair-elect for a year and then chair) with at least some earlier time on the board as a director. The organizationsought a vehicle that would enable the outgoing chair to continue involvement with the organization and,at the same time, provide some mentoring experience for those coming up through the organization. Toestablish a project that would fulfill this need while adding value to the organization, the board created theFuture Leaders Program. Near the end of the chair's term, he or she would assign a project and lead itsimplementation with a group of younger members with potential for serving the organization in leadershippositions. The chair would work with these individuals through the term and through most of the followingyear. The team would then make a presentation to the following year's board on the results of their 

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