In our last post, we discussed that the results of a recent survey by Greybeard Advisors that asked “has our profession advanced, or regressed?” led Robert Rudzki to conclude that overall, based on the companies that participated in the survey, we cannot show that our profession has advanced during the past four years; in fact, at some companies, there has been a return to more tactical approaches and objectives.

Why is this?

Some insight is provided by the survey responses to the “write-in” topic that asked for the single most important factor that worries me about ensuring our supply management organization will be successful is. The top themes from the responses provided were:

• Lack of ongoing commitment from top-level management and buy-in from the rest of the company
• Lack of proper planning and budgeting from our internal clients
• Incompatible objectives of multiple business units
• Lack of bandwidth / resources to do the job properly
• Need less focus on tactical wins in favour of larger, greater returns (from doing the job strategically)
• The challenge of how to invest in the future of the department while simultaneously being told to reduce budgets

In SI’s view, it still comes down to the manpower capability issue, which is a direct result of the lack of education and training that pervades our space. If everyone was suitably educated and trained:

• top-level management would see the importance of the function and their commitment to its success and provide the appropriate support
• other units would understand what is required of them in terms of financial and manpower resources
• business unit objectives would be appropriately aligned to maximize success
• sufficient resources, including sufficient training on such resources, would be provided
• the focus would be on long-term gains vs short term wins and
• training would be emphasized, and mandated, not cut!

In summary, SI will state again that people have to be educated and trained at all levels of the function, and until that happens, up-to-date technology or not, there is not going to be any progress.

In Part I, we noted that Lora Cecere discovered, while analyzing the balance sheets of process companies over the past decade, that the average process manufacturing company has reached a plateau in supply chain performance as noted in a recent piece over on Supply Chain Shaman which stated she believes we have reached the supply chain plateau.

In Part II, we noted that growth has stalled, and asked why it has stalled. Lora conjectures that while complexity has increased, many well-intentioned executives lack the understanding of the supply chain’s potential or how to manage the supply chain as a system. This means that even though individual projects are getting great results, departments as a whole are not performing as well, and being managed even worse. Why? One conjecture, as implied in Lora’s post, is the current state of supply chain technology and ERP (and forecasting) systems in particular. And while there is a discontinuity and we need to declare the APS and ERP systems of the 1990s obsolete and start again, SI does not agree this is the core problem. The core problem is manpower capability. Not only do most executives not understand the supply chain from a holistic perspective, but neither do the function managers … who often do not even understand the best practices associated with their job because of the lack of education (and training).

But is this the whole picture? Robert Rudzki, of Greybeard Advisors, recently ran a 4-part series on the SCMR blogs where he summarized the results of a survey last quarter which asked “has our profession advanced, or regressed?”, which was administered as a result of anecdotal evidence that Procurement and Supply Management has regressed at some companies during the past 3 to 5 years. The survey, which was primarily filled out by Supply Management function leaders or direct reports and which drew interest from better-performing companies, produced some interesting results:

• Only 38% of the respondents agreed with the statement that their “top management really understands and appreciates the enormous potential of modern supply management”, which is lower than the 47% who agreed with the statement in Greybeard Advisors’ 2008 survey
• About a third of respondents indicated that they developed and presented a business case, also lower than the original survey
• Not surprisingly, less than 30% of respondents indicated that “top management strongly supports the supply management organization with sufficient resources and budget”, also lower than the original survey.

And led Bob to conclude that overall, based on the companies that participated in the survey, we cannot show that our profession has advanced during the past four years; in fact, at some companies, there has been a return to more tactical approaches and objectives. Ouch! Why is this?

Last week, Lora Cecere stated over on Supply Chain Shaman that she believes we have reached the supply chain plateau.

I believe that, while we have been in a bit of an innovation dry spell the last few years relative to the early noughts, there is still innovation to come and mountains to climb, but Lora’s evidence is pretty damning: while analyzing the balance sheets of process companies over the past decatde, she discovered that the average process manufacturing company has reached a plateau in supply chain performance. Specifically Lora found that:

Growth has stalled. To compensate and stimulate revenue, the companies increased SG&A margin by 1%. However, the conditions were more complex; the average company, over the last ten years, experienced a decline of 1% in operating margin, and an increase in the days of inventory of 5%. While cycle times have improved, the majority of the progress has come from lengthening of days of payables and squeezing suppliers.

And delaying payments and squeezing suppliers is not progress!

This is scary! Really scary! And before I discuss this any further, you need the facts and you need to read Lora’s post.

SI’s post is going to end my here today so you can go read it and dwell on it. We’ll discuss this more in SI’s next post.