A supply chain management [SCM] organization typically ensures how efficiently and effectively manufacturers, distributors and service organizations handle material. Material handling disciplines include planning, sourcing, transporting (in/outbound), maintaining (storing, controlling and protecting) and retrieving (from customers). These PSTMR processes weren’t always integrated under the SCM umbrella. SCM has only evolved over the last 40 years within business communities, their professional societies and in academia. We’ll discuss this evolution, and what the future may hold for the SCM concept, from the industry and academic perspectives.
Industry Becoming Educators
In 1974 each PSTMR process was managed in a silo. For example, planning’s activity of employing independent demand forecasting was the focus of operations research professionals, often positioned within the industrial engineering department. Sourcing was managed in the purchasing department, which sometimes reported to the comptroller. Every organization was structured differently for managing PSTMR.
By 1976 the first attempt to corral all PSTMR processes under one group was begun. It was called materials management (MM). The concept was primarily focused in the manufacturing sector. Companies such as Motorola, IBM, Tennant, Gould and others embraced MM and achieved measurable success, which opened the door for others to follow. One of the primary drivers for MM was the implementation of materials requirement planning (MRP) application software, which was an enabler in knitting the PSTMR processes into one information network, and in turn facilitating the management of these processes.
In the early days of MRP, hardware technology was primarily mainframes, employing punch cards; it would be unrecognizable to a 30-year-old. The MRP body of knowledge was supported and disseminated primarily through APICS: conferences, journals, books, seminars and special interest groups. Many other professional societies also provided MM-focused training to the business community. For 20 years, MRP software, which evolved into enterprise resource planning (ERP), slowly became the principal tool for MM. In the mid-1990s the concept of the Supply-Chain Operations Reference (SCOR) model came into its own with the support of industry and professional societies; it tied the processes of SCM into one integrated enterprise. Today SCOR has become the standard model for the SCM enterprise, employed by the manufacturing, distribution and service communities.
In tandem with the SCOR model evolution was the consolidation of the application software market in which the majority of niche SCM process providers, such as warehouse management, transportation management and demand management, were integrated into an SCM suite.
Global sourcing, global demand, product life cycle issues, IP protection, fake products entering the supply chain and much more are all contributing to the next phase of the evolution of managing the PSTMR processes. Businesses and their professional societies are still trying to figure out how the SCM enterprise (SCME) will be configured in the future, but it will surely be different from what it is today. In order to adapt to this evolution, academia has had to play an important role in providing the intellectual leadership and training for industry and their professional societies over the last 40 years and will be counted upon to provide the SCME leaders of the future.
Schools Getting Schooled
The number of supply chain and logistics programs at U.S. universities has increased rapidly in recent years, and this fast pace will likely accelerate. Despite dramatic recent growth, the number of academic supply chain (SC) programs pales in comparison to more traditional business disciplines. According to EducationNews.Org there are currently 44 undergraduate and/or graduate programs in the U.S., generating an estimated 1,000 graduates per year.
In contrast, virtually every U.S. business school has programs and majors in disciplines such as accounting, finance and marketing (i.e., hundreds of programs). The relative dearth of SC programs in U.S. academia heightens the importance that SC programs produce graduates with skill sets that meet the requirements and expectations of private industry employers. In the remainder of this article, we discuss how academic SC programs can best prepare their graduates for successful careers with future employers in private industry.
One of the most critical requirements is that university SC curriculums strike an appropriate balance between the “academic” and the “real world” aspects of supply chain management. Neither a purely “textbook” approach, nor a curriculum devoid of any “academic” supply chain theory and textbooks is ideal. Rather, a curriculum which melds these two extremes into an integrated approach can best position students to be successful future contributors in private industry. This philosophy is easy to espouse, but a challenge to implement. Let’s consider inventory management, and in particular the use of safety stock, to illustrate.
The calculation of safety stock inventory levels required to deliver a target customer service fill rate (e.g., a 98% unit fill rate) utilizes standard statistical formulas. These formulas are found in commercial inventory management software such as the SAP and Oracle ERP inventory modules. Returning to the subject of “curriculum balance,” this raises the question: How expert in statistical methods should college graduates entering the full-time SC workforce (and potentially using this software) be?
Let’s add to this question the authors’ observations that in many companies, there are few SC employees who actually know how to calculate a safety stock target using statistics. Those colleagues responsible for managing operational safety stock levels rely on their software to establish actual required levels—after they prescribe the targeted fill rate. This may seem a trivial example, but it illustrates an important philosophical issue that universities must address in establishing their SC curriculum—and it has implications for the level of student interest these programs generate.
For example, an overly academic approach would require that undergraduate and MBA SC majors complete three statistics courses to ensure that students have a deep understanding of these inventory calculations and the theory behind them. An overly real world perspective would propose that students need only have a conceptual understanding of the role of safety stock—because there are software systems to generate these calculations—and because few SC professionals know how to derive safety stock targets themselves. We would suggest the appropriate balance lies between these two extremes. Students should have general knowledge of how to calculate safety stock targets, but they need not have a deep and highly mathematical understanding of safety stock theory.
How can universities ensure their SC curriculum offers the appropriate balance, and at the same time stays current with the evolving field of SC? We close this article with the following recommendations—many of which leading SC programs currently practice.
There must be a strong, ever-present effort by academic programs and faculty to collaborate with private industry practitioners on the content of a SC program’s curriculum.
This collaboration can take many forms, such as:
- An academic SC program with an advisory board composed of SC practitioners who help guide and keep the curriculum current;
- SC professors calling in guest speakers from industry for several of their classes each semester;
- Course content using a mix of textbook material, cases and videos. The Internet abounds with short videos on a myriad of current SC issues, products and capabilities. This includes videos from vendors advertising their SC equipment and services;
- SC programs should encourage the use of adjunct professors from industry whenever possible (e.g., SC practitioners who teach one course);
- SC programs offering more clinical professorships, full-time academic positions filled by ex-industry SC practitioners. These professorships are devoted to teaching and mentoring students, and do not have the traditional research and publishing responsibilities of full-time academics.
Finally, we note that SC professionals in industry can contribute to this process by making themselves and their organizations available to support academic SC programs. This support provides both an overall contribution to the future enhancement of the SC field, and it positions individual firms to have enhanced visibility and access to potential future SC employees for their own firms.
This is an exciting time for professionals in the supply chain management arena. New technologies, changes in the business model and demographic challenges will continue to converge, further raising the visibility of SCM professionals.
Postscript: Ongoing Practitioner
We would be remiss if we didn’t mention the terrific continuing educational opportunities available to practitioners via SCM professional organizations. Entities such as APICS, CSCMP and ISM—to name just a few—offer extensive SCM courses, as well as professional certification. Given the rapidly evolving state of SCM, ongoing education can be a valuable resource to help professionals both stay current and advance in their careers—particularly practitioners in the early to mid-level stages of their SCM careers.
Further, affiliations with professional organizations afford practitioners important networking opportunities that can benefit them throughout their careers.
Ron Giuntini is a consultant and principal of Giuntini & Co., Inc. Tan Miller is director of the Global Supply Chain Management Program at Rider University’s College of Business Administration. Both are members of MH&L’s Editorial Advisory Board and both say they have benefitted greatly from their participation in professional SCM organizations.