ISM - Career Center - The Power of Supply Management

The Power of Supply Management

Careers in Purchasing and Supply Management

Records show that as early as the 13th century B.C., supply management played an important role in business. Today, it would be difficult to find an organization, large or small, that doesn't understand the importance of supply management, and how successful implementation of supply management principles can have a positive impact on its overall success.

When you choose a career in supply management, you have an opportunity to work in a variety of organizations and businesses. Every industry -- whether manufacturing or service, governmental, educational or retail -- employs supply management professionals.

Supply management is defined as the identification, acquisition, access, positioning and management of resources that an organization needs or potentially needs in the attainment of its strategic objectives. Supply management is one of the six major functions common to most types of organizations:

Supply Management
Finance and Accounting
Marketing
Human Resources
Engineering
Research and Development

The overall goal of supply management is to impact the organization's bottomline in a positive way while delivering the best service to customers at the lowest possible cost. This puts supply management on the center stage of every business operation. While it involves a number of actions, the objectives of supply management can be summarized around nine major goals:

Provide an uninterrupted flow of materials, supplies and services required to operate the organization
Keep inventory investment and loss at a minimum
Maintain and improve quality
Find or develop competent suppliers
Standardize, where possible, the items bought
Purchase required items and services at lowest total cost
Achieve harmonious, productive working relationships with other functional areas within the organization
Accomplish the purchasing objectives at the lowest possible level of administrative costs
Improve the organization's competitive position

(Source: Leenders, Michiel R., Fearon, Harold E., Flynn, Anna E., and Johnson, P. Fraser, Purchasing and Supply Management, 12th edition, McGraw-Hill, Boston, 2002)

As a supply management professional, your duties may expand beyond the acquisition of materials, services and equipment into such areas as planning and policymaking, motivation, evaluation, product development, and control. Unlike other professions, supply management offers the opportunity to be involved in a variety of activities. One day you may be working on a global contract for millions of dollars and the next day you may be interfacing with your operations staff to plan new processes. Depending on the size of the organization, you may have a variety of responsibilities or you may focus on one area of the supply chain. Some supply managers are actively involved in product design and development, while others may focus on contract development and forecasting.

Regardless of your job title or specific responsibilities, you'll be enhancing a skill set that may include the following:

Negotiations
Strategic alliances
Relationship management
Cost/price analysis
Legal aspects of purchasing
Performance measurements
New technology/software
Supplier evaluation
Electronic commerce
Contract development
Strategic planning
Team building
Logistics
Economic forecasting
Inventory control
Contract management
Transportation and traffic
Distribution
Benchmarking

Of course, the atmosphere in which you work will vary from organization to organization. In larger organizations, the supply department may consist of several hundred employees assigned to specialized tasks and led by a vice president, director or manager who directs the overall operation.

In many organizations, supply management professionals work on cross-functional/inter-functional teams with the organization's design, engineering, financial planning, marketing, sales and planning groups on such issues as determining operational requirements and meeting customer needs. In some organizations, the supply management department may be responsible for spending 50-60 percent of the gross revenue.

The supply management professional's impact is felt in all industries and can exert tremendous leverage on an organization's profitability and operational success. It can also be a tremendously rewarding career opportunity.

Diverse and Dynamic

Supply management is a profession enjoyed by all. Men and women of all ethnic groups hold prestigious and rewarding positions in supply departments around the world. From small businesses to Fortune 500 companies, organizations of all types and sizes rely on supply management professionals to ensure the most efficient and profitable operations possible. World-class organizations will require world-class supply management operations staffed with professionals committed to providing competitive advantage to their organizations.

Supply management is a profession that has something of interest for everyone, whether it be designing, auditing, researching, analyzing, budgeting, forecasting, buying or planning. Supply management departments encompass many different positions at various levels, and whatever the title, supply managers are involved in a truly broad career directly impacting an organization's bottomline and success. The challenges are great -- but so are the rewards.

Changing Times Mean a Changing Profession

Yesterday's supply manager pushed paper in a reactive environment. Today's supply manager is being asked to take a proactive approach to contribute to the strategic direction of the organization. Supply management strategy is recognized as a strategic weapon equal in importance to other functional areas of the organization like marketing, finance and production. This ever-expanding role often requires supply managers to do business in a variety of different ways. The use of supply management tools like strategic alliances, integrated suppliers and early supplier involvement requires that supply managers take on roles as relationship managers, both inside and outside the organization. As a result, both verbal and written communication skills are important for success in the profession. Supply managers must also understand technology and its many uses, as well as data analysis and finance.

The increasingly interconnected world in which we live is also having an impact on the supply management profession. Supply managers may be asked to find and evaluate international sources of supply and to integrate and coordinate requirements across the globe. As a result, cultural understanding and language skills may be important in your position.

Strategic skills, a global perspective and the ability to manage professional relationships -- these are just some of the characteristics of the successful supply management professional in the 21st century.