Career Overview: Supply Chain Management
Behold leaf cutter ants. At the command of their queen, the ants march in lockstep, cut leaves from rainforest trees, and, in a perfectly ordered line, carry the right number of tasty leaves in their mandibles back to the colony and their discerning queen. As a species, humans have no such innate sense of how to move products from their source to end users.
Supply chain managers seek to create what ants do naturally: They attempt to integrate and optimize all the steps required to produce the right amount of the right product and deliver it to the end user at the right time. In other words, supply chain management (SCM) is involved in every aspect of getting products to customers, from raw materials to consumption. As one insider defines it, "Supply chain management is interested in everything that happens to a product from cradle to grave." Whereas the field of logistics was born in World War II as part of the effort to get the right amount of supplies to the troops at the right time, supply chain management took the novel approach of looking further back into the life of a product to its manufacture and even product design while integrating what were once thought to be unrelated disciplines: marketing and customer service.
In the field of retailing, Wal-Mart, the largest company on the Fortune 500, has elevated supply chain management to a strategic imperative-a tactic responsible for much of the company's success. By carefully managing its suppliers and distribution practices, it has been able to reduce its costs and offer its customers products at prices far below those of any other retailer. In the manufacturing industry, Dell has become the largest computer maker in the world based on the simple conceit of eliminating retailers and distributors; in doing so, Dell reduced inventory costs on highly obsolescent products. In much the same way, Amazon.com's success is due to its exploitation of inefficiencies in the supply chain for a number of categories of goods. Finally, transportation and logistics companies themselves revolutionized the way people do business. DHL, for instance, recognized that processing of international customs papers in foreign ports would often hold up shipments for weeks. It solved this problem by flying customs papers ahead of shipments for processing, so that the paperwork would already be completed by the time a ship arrived at port, allowing it to be unloaded immediately. While supply chain management has had a huge impact on these three industries, the SCM function, with roles such as procurement manager, logistics analyst, materials manager, warehouse manager, inventory analyst, and of course, supply chain manager, remains somewhat unheralded.
In general, SCM recruiters are not looking for generalists, even at the entry level. Most firms and organizations have a select group of SCM programs from which they recruit, such as Arizona State and the University of Wisconsin at Madison. If you aren't in a school at which the firm recruits, an internship might get you in the back door. Because the market is soft now, firms are demanding industry and functional experience even for entry-level positions. In the MBA world, firms look for supply chain coursework or dedicated supply chain programs.
Certifications aren't required, but they do help in a slack market. Common certificates are Certified Purchasing Manager (CPM) and CPIM (Certification in Production and Inventory Management). More than one quarter of all purchasing professionals hold a CPM certification, and nearly 10 percent hold a CPIM certificate.
Clearly, proficiency in an enterprise resource planning (ERP) software package such as SAP, Oracle, or i2 greatly enhances your marketability. Detail orientation is always a prerequisite for supply chain jobs-you can't overdo attention to detail when communicating with prospective employers, either in informal conversations or during the interview process. Finally, because of the cross-functional nature of the field, communication and people skills are paramount.Job Outlook
The outlook for supply chain management looks healthy. However, in the case of midcareer job seekers, most companies look for candidates with coursework in supply chain management or prior industry and functional experience. These prerequisites limit the number of qualified candidates in the field. While no role clearly outshines the others in terms of employer demand, more and more companies are reorganizing around supply chain management (as opposed to logistics or materials) and so supply chain manager roles are becoming more prevalent. Clearly, proficiency in an enterprise resource planning (ERP) software package such as SAP, Oracle, or i2 greatly enhances your marketability.
Like most industries, SCM has been affected by the 2008-2009 recession, in particular, the shipping sector. Global shipping is often telling of the world's overall economic status: Time Magazine dubbed it "The Most Important Economic Indicator You've Never Heard Of." The Baltic Dry Index, which tracks the cost of shipping raw materials, dropped from an all-time high of 11,793 in May 2007 to below 800, a 22-year low at the end of 2008. Although shipping has been greatly affected, the supply chain industry as a whole is doing well and many experts believe there will be an upswing soon.
Detail orientation is always a necessity for supply chain jobs-you can't overdo attention to detail when communicating with prospective employers, either in informal conversations or during the interview process. Finally, because of the cross-functional nature of the field, communication and people skills are paramount.
As if searching for a job weren't difficult enough, job descriptions in supply chain management suffer from a blurring of responsibilities over titles, a lack of standard nomenclature for positions, and, often, a lack of distinction between ranks. In the first case, the job description for a given role may encompass a number of disciplines. For instance, in a manufacturing firm, a procurement or purchasing role might include inventory management responsibilities; in a distribution or logistics firm, those same duties might fall within a transportation role.
A standard nomenclature for supply chain management roles does not exist. Unlike the field of consulting, where the differences between analyst and associate/consultant are nearly universally understood, a single role in supply chain management might be called analyst, specialist, or coordinator, depending on the caprices of the company that set out the requisition for that position. The field doesn't readily distinguish between levels of seniority and expertise in job titles.
For instance, within the same company, a PhD with 20 years of experience and profit/loss responsibility and a greenhorn with a freshly minted bachelor's degree both may be called a specialist. To simplify this, we've broken down roles into key areas: materials and procurement, logistics, supply chain management, transportation, inventory management, operations, sales and customer service, and consulting.
Materials and Procurement Roles
Materials schedulers coordinate raw materials and inventory with production schedules. They serve as conduits so that the right amount of material arrives at a production facility at the right time. Likewise, they coordinate release of finished products with movement to quality assurance.
Education: BA/BS, often advanced degree in business, supply management, or industrial engineering
The purview of this function is materials and inventory components. Duties include managing inventory levels, coordinating with purchasing and materials budgeting and forecasting, and, often, warehousing, receiving, and scheduling responsibilities. Employers often seek materials analysts with justin- time or lean manufacturing knowledge, as well as competency in Six Sigma practices. Often, the materials analyst works closely with engineering and product development teams to determine what affects changes in materials will have on the production of a product. At more senior levels, such as manager or director, you take on a strategic role to improve processes, quality, and productivity. The position requires excellent analytical skills, the ability to work with people across functions, and attention to detail.
Education: BA/BS, advanced degree
Production managers serve as mini-plant managers in a manufacturing company. Their responsibilities include coordinating production schedules, forecasting labor requirements, maintaining quality, determining material requirements, and managing finished goods inventory/output. The position often leads to roles as plant manager and often to executive operational roles, such as COO. As with most manufacturing positions, many companies seek people with Six Sigma and lean manufacturing experience. The career path in production management might be two to four years as an analyst, another two to four years as a production manager, then on to director-level roles.
Procurement Analyst/Purchasing Manager
Education: BA/BS, MBA
As the title implies, purchasing managers oversee an organization's purchasing operations. Junior roles, such as procurement analyst, typically focus on a single aspect of procurement and purchasing. For instance, a procurement analyst might work primarily on analyzing historical purchasing costs for materials, forecasting future costs, or finding prospective vendors. In large organizations, purchasing is a large and strategic endeavor. Purchasing involves identifying suppliers from which to source materials, selecting those suppliers, negotiating supply contracts, developing the business frameworks for those contracts, and managing suppliers. Purchasing managers work with materials managers and manufacturing departments to identify the material needs for the organization. Moreover, purchasing managers develop metrics for managing procurement costs, delivery times, service levels, and quality.
Education: BA/BS, advanced degree
Analysts and managers work on a wide range of logistics functions, including warehouse and distribution operations, forecasting, planning, logistics information systems, customer service, and purchasing. Analyst roles might deal with an area within the logistics function, while senior roles such as manager or director roles involve overseeing a team of analysts. Managers negotiate and contract with suppliers and carriers, develop supply chain metrics and strategy, and oversee day-to-day management of logistics functions. Analysts devote much of their days to problem solving, forecasting, and ensuring that operations are running within determined metrics.
While all levels in the area require strong analytical skills and attention to detail, senior roles require outstanding people skills and strong negotiation skills.
Salary range: $37,500-64,000 (analyst); $70,000-100,000 (manager)
Supply Chain Management Roles
Education: Bachelor of civil, industrial, or mechanical engineering
Process engineers typically analyze processes within any number of industries-manufacturing, distribution and transportation, or retail-and develop improved processes that make better, safer use of labor, materials, energy, and other resources. For instance, a process engineer in a distribution center might work to improve outbound and inbound traffic processes or invoice handling. In a manufacturing environment he might develop a better method for handling raw materials. Additionally, he might develop the metrics used to manage the processes once improved.
Supply Chain Analyst
Education: BA/BS, MBA
The analyst typically supports the supply chain manager through any number of activities, including defining and articulating business processes, performing analysis on any aspect of the supply chain, evaluating vendors and potential supply chain partners, researching industry best practices, participating in meetings, and communicating supply chain management goals to cross-functional teams.
Supply Chain Systems Manager
Supply chain systems managers support logistics and supply chain operations through oversight and management of software systems such as i2, Baan, SAP, and Oracle. Functions include managing vendors and consultants, developing system requirements, reporting requirements, overseeing analysts and developers, and communicating needs of business and technical functions. The systems manager has knowledge of business processes, supply chain management practices, system design, and software and hardware design and the ability to communicate between technical and business groups.
Supply Chain Manager
Education: BA with 5-10 years of experience, MBA
The supply chain manager role is the Holy Grail of supply chain management and logistics, both sought after and elusive. The scarcity of pure supply chain manager roles comes from the fact that the role is interdisciplinary, spanning logistics and distribution, purchasing, manufacturing, inventory management, and even marketing and product development. The supply chain manager reviews existing procedures and examines opportunities to streamline production, purchasing, warehousing, distribution, and financial forecasting to meet a company's needs. The job typically involves developing strategies to cut costs, improve quality, and improve customer satisfaction.
Supply chain managers need to know distribution center operations, transportation, supplier operations, operations management, cost-benefit analysis, process improvement, and logistics strategy; moreover, they need excellent management and communications skills. They must be able to not only develop solutions, but also drive their implementation across functional areas and through to vendor organizations and supply chain partners. Companies seeking supply chain managers additionally look for Six Sigma experience and, in manufacturing settings, lean manufacturing experience.
Vice President, Supply Chain Management
Education: BA/BS, MBA
At the top of the supply chain management food chain, the vice president is part of the senior management team and usually reports to the chief operating officer of a company. The vice president's purview often includes all supply chain functions, including logistics, facilities, and purchasing. The vice president translates executive strategies into supply chain functions. Directors of the various functional areas in supply chain often report to the vice president.
Salary range: $125,000+
Transportation managers typically work under logistics managers to oversee the inbound and outbound traffic of materials and finished products from a distribution center. Transportation managers will often manage carriers, transportation costs within specified metrics, third-party transportation providers, and freight bill presentation; negotiate contracts; and ensure that freight moves smoothly across international borders. Because the transportation manager must ensure that transportation activities meet legal requirements, she must be familiar with Department of Transportation regulations. Like other positions in transportation, this is a demanding position with long, unpredictable hours, at times even being on call 24/7: You have to make sure that the train or the truck or the plane or the bus leaves on time. Work/life balance can be an issue in this job.
The fleet manager supervises and manages a dedicated contract carrier or private fleet. His duties include hiring and managing drivers, developing routes, ensuring that the fleet meets Department of Transportation regulations, and optimizing fleet utilization. The fleet manager also manages fleet inventory, ensures preventive maintenance takes place, and plans fleet growth requirements. Although it requires forecasting and analysis skills, the fleet manager is primarily a hands-on management role. Interpersonal skills are essential to success in the position. Like many other jobs in transportation, this is a demanding job in that it often comes with long, unpredictable hours.
Salary range: $45,000-85,000
Inventory Management Roles
The inventory specialist works to optimize inventory levels based on the costs of inventory and warehousing, service levels, and replenishment time and costs. An inventory coordinator might work at the retail, distribution center, or plant levels. Duties include working with supply chain managers to determine optimal inventory levels, analyzing historical sales data and seasonal demand to determine inventory needs, analyzing processes to determine replenishment cycles, and resolving issues related to inventory levels and replenishment. The inventory specialist role requires keen analytical skills and the ability to work at a level of high detail.
Vendor-Managed Inventory/Replenishment Specialist
The vendor-managed inventory (VMI) specialist works for a manufacturer to manage the inventory of a customer. For instance, Procter & Gamble might have a contract to manage the inventory of its products at a grocery chain. The VMI specialist would then work to optimize inventory levels for the client. Using sales activity, promotions data, and historical data, the specialist plans inventory replenishment, working with clients to determine optimal inventory levels and getting the data needed to carry out the task. The VMI specialist works with teams from both the vendor and client companies to ensure that manufacturing and demand are synchronized. The VMI specialist must not only possess knowledge of supply chain processes and analytical prowess, but also the ability to instill confidence in a customer whose business depends on proper inventory management.
Warehouse Operations Manager
The warehouse operations manager typically works in the retail or distribution and transportation industries. He manages the placement of inventory within the warehouse, ensures the accuracy of inventory levels, oversees warehouse personnel, and makes certain that the warehouse meets regulatory safety requirements. The warehouse manager's skill set includes impeccable communication skills across educational and demographic strata, leadership skills, and some analytical skills. Warehouse managers are typically hands-on managers with a practical approach to management.
Salary range: $37,000-85,000
A facilities manager's responsibilities typically include managing the physical building and machinery required to keep an operation such as a distribution center running smoothly. Therefore, facilities managers manage maintenance of equipment, plan for contingencies should equipment fail, and plan requirements for new property and equipment. Typical distribution center equipment includes conveyers, picking lights, sorters, and scanners. Facilities managers often work with outside vendors to develop training on equipment and negotiate maintenance contracts with vendors.
Sales and Customer Service Roles
Account Specialist/Customer Service
The account specialist/customer service role is typically an entry-level position for newly minted supply chain management majors. A specialist typically works at a logistics or transportation firm and is assigned a customer for whom he serves as primary contact. Typical duties include resolving customer service issues for a client, building relationships with clients and carriers, and coordinating shipments for the client.
Customer Service Manager
The customer service manager leads teams of customer service representatives in resolving issues and maintaining high customer satisfaction. The role involves ensuring that contractual support representatives meet contractual service levels, defining those service levels, developing support center processes, and working with other functional areas to control service costs while maintaining customer satisfaction. Although customer service isn't the most glamorous of functions within supply chain management, it does give greenhorns ample exposure to different aspects of the business.
Account Manager/Supply Chain Sales
Supply chain account managers typically sell supply chain, outsourcing, or third-party logistics solutions to customers in specific industries, such as manufacturing or consumer packaged goods. The work of the account manager typically includes two functions: sales and account management. The first part of the job entails developing, along with specialists, a solution for a proposed customer. The second part entails ensuring that the customer is satisfied with the solution provided and finding additional solutions for follow-up work. In the second part of the function the account manager typically works with support and operations personnel to determine potential follow on solutions. The account manager also follows up on service issues for a client, while not necessarily resolving those problems herself. The account manager must be able to instill the client with enough confidence to hand over critical supply chain functions to the vendor firm.
Supply Chain Analyst
Analysts typically work under project managers and consultants in consulting firms. They often stay in that role for 2 to 4 years, at which time they move on to become project managers or go back to school to get their MBAs. In smaller consulting firms, analysts may stay in the role indefinitely or combine the analyst role with that of project manager. Supply chain analysts typically define business processes and then apply software systems such as SAP, i2, or Baan to improve and automate those systems. Put simply, analysts customize software packages to meet the needs of large enterprises. Typically, analysts interview people in manufacturing, inventory, logistics, warehousing, and procurement functions to determine a company's business processes and supply chain requirements. They then match these requirements against the features of a software package and work with application developers to customize that package to the client's needs. Sometimes analysts will do some minor software development work themselves.
Supply Chain Consultant
Education: BA/BS with 5-10 years of experience and/or MBA
The supply chain consultant is a rare and desirable role: a senior employee, usually post-MBA, who joins with an analyst and project manager to make up the team on a consulting engagement. The SCM consultant reviews existing procedures and examines opportunities for streamlining production, purchasing, warehousing, and distribution to meet a company's needs, then develops strategies to cut costs, improve quality, and improve customer satisfaction. In addition to a familiarity with distribution center operations, transportation, supplier operations, operations management, cost-benefit analysis, process improvement, and logistics strategy, SCM consultants need excellent management and communication skills.
Education: BA/BS, MBA
Project managers typically lead consulting teams in the day-to-day management of client engagements. They often directly supervise analysts and work with consultants to ensure that a project is implemented according to agreed-on time and cost metrics. Their primary responsibilities are communicating with clients, marshalling firm and client resources, and working to ensure the project goes according to plan.
Director of Client Management/Engagement Manager
Education: BA/BS, MBA
The director of client management/engagement manager usually works for an outsourcer such as a third-party logistics or consulting firm. In a logistics firm, the director of client management typically manages account managers and sales staff, sets sales targets for managers, determines the strategy and value proposition of the outsourcer, and works with account managers to tailor strategies to specific clients. In a consulting firm, the engagement manager typically oversees a consulting engagement at the executive level. The role is often something of a rainmaker, wherein the director uses her industry contacts to gain access to decision-makers within target companies.