APICS News

APICS News

A World View on Supply Chain and Procurement

By APICS CEO Abe Eshkenazi CSCP, CPA, CAE | 0 | 0 | December 07, 2012

Abe Eshkenazi Photo

APICS CEO
Abe Eshkenazi

CSCP, CPA, CAE

In many advanced economies, supply chain management is valued as a unique professional discipline. However, this isn’t universally the case. An article produced by Crown Agents, a U.K.-based development firm, recommends that in many developing nations, supply chain management needs to be elevated. “Effective supply chain management plays a critical role in ensuring funds are well used, value for money in the delivery of basic services is achieved, and transparency and accountability is assured, the value of professional supply chain management needs to be recognised.”

Beginning last week and continuing through the month, we are exploring the report, “Manufacturing the Future: The next era of global growth and innovation,” published by the McKinsey Global Institute (MGI). The report examines the changing role of manufacturing and the factors and trends guiding its evolution. Of particular interest to us is how MGI identifies the following five broad, distinct manufacturing groups by the requirements of their supply chain networks:

  • global innovation for local markets
  • regional processing
  • energy and resource-intensive commodities
  • global technologies and innovators
  • labor-intensive tradeables.

These categories align with several factors that impact the design of the group’s supply chain networks, such as research and development (R&D) intensity, labor intensity, energy intensity, and value density. For example, wood products (in the energy and resource-intensive category) are an industry with high energy and labor needs, but low R&D requirements. Conversely, computers and office machinery (in the global technologies and innovators category) require a great amount of R&D, but are relatively energy- and labor-light.

What this breakdown highlights is the difference in the supporting supply chains of developing and developed nations. More advanced economies, such as the US and Europe, tend to concentrate on more sophisticated, R&D-oriented and high-value supply chains. Emerging manufacturing economies, such as a number of Southeast Asian countries, tend to focus on labor intensive tradeables, such as textiles. And as economies advance, they have greater supply chain management requirements, and the value of education and professionalism in supply chain is apparent.

The same effect can be seen in small versus large enterprises. Sometimes, at the small business level, procurement is just that__procurement. Logistics is logistics. However, as organizations grow in scope and complexity, their supply chain networks grow in scope and complexity as well. This is illustrated in the definition of supply chain from the APICS Dictionary, 13th edition: “The global network used to deliver products and services from raw materials to end customers through an engineered flow of information, physical distribution, and cash.”

As the world’s largest supply chain professional society, APICS recognizes that supply chain is more than just the sum of its parts. Managing the intricacies of the constantly evolving global supply chain requires the investments of education and training in supply chain and operations management principles. Earning the APICS Certified in Production and Inventory Management (CPIM) and Certified Supply Chain Professional (CSCP) designations are two ways to demonstrate to employers that you have the knowledge and ability to manage complex 21st-century supply chains.

The MGI report reveals the growing importance of manufacturing, procurement, and supply chain and operations management in today’s economy. This is an exciting time for the profession. Join us next week as we delve further into the report, and continue the discussion in the Operations Management Now community in the APICS Supply Chain Channel.

In other news

Related APICS Education

  • The Origins of Complexity
    By J. Brian Atwater, CPIM, and Paul Pittman, PhD, CFPIM, CSCP, Jonah
    September/October 2012, APICS magazine

  • Here or There?
    By John P. Collins, CFPIM, CSCP, and Eric P. Jack, PhD, CFPIM, CSCP
    May/June 2012, APICS magazine

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