Features

On Track & On Target

Author(s):

Roberta J. Duffy
Roberta J. Duffy is editor of Inside Supply Management®

July 2002, Inside Supply Management^® Vol. 13, No. 7, page 20

Thousands demonstrate that professional development and education are priorities by attending ISM's 87th Annual International Supply Management Conference and Educational Exhibit

In an economic environment that demands aggressive cost strategies, efficient business operations, and leading-edge thinking, the going might get tough, but the tough go looking for answers. Supply management professionals asked questions and found answers at ISM's 87th Annual International Supply Management Conference and Educational Exhibit in San Francisco, May 5-8. There were answers with regard to negotiations, contracts, supplier relationships, e-business, and economic trends. There was networking, tools to sample, and peers to honor. The City by the Bay hosted over 2,100 professionals for a Conference filled with highlights.

For some, the highlights were the educational workshops where practitioners from firms such as Federal Express, Hilton Hotels, John Deere & Co., and Phelps Dodge shared their vast experiences.

For others, the highlight was the Educational Exhibit Hall, where 108 exhibiting companies were able to speak one-on-one with attendees and answer questions.

For still others, the highlights came through the networking opportunities. Meals, session breaks, and specific networking functions allowed ample time to meet fellow professionals, exchange contacts, and discuss common experiences.

Regardless of what track was chosen by each individual (five different tracks of educational workshops were available), one overriding factor brought them all together: an appreciation for the profession and their peers. Nowhere was this more evident than in the Continental Ballroom Tuesday evening at the Volunteer Appreciation Banquet. Persons of the Year Awards were given out (see the top photo on page 22) and Ralph G. Kauffman, Ph.D., C.P.M., was honored with the J. Shipman Gold Medal. (See the article "Rise and Shine" in the June issue of Inside Supply Management®.)

Stellar Speakers

The Conference began on a high note with Sunday's keynote speaker, the Bay Area's own Hau L. Lee, the Kleiner Perkins, Mayfield, Sequoia Capital Professor in the Graduate School of Business and School of Engineering at Stanford University. Lee spoke to attendees about the ways in which supply management can add value through substitution, scale, and structural effects.

For example, substitution effects occur when one method or material is substituted for another. He said that many are at this stage, using automation and the Internet for time efficiency. Scale effects occur when there is a better match between supply and demand, such as being able to access more suppliers or more customers, lowering overall costs. Structural effects are of the highest level and occur when intelligent supply chain coordination takes place as information is optimized between functions.

Lee gave one example of the benefits that can be achieved (or rather, inefficiencies that can be avoided) when information is appropriately shared across functions and the supply chain. He told the story of a car manufacturer in Europe, whose in-stock inventory of green automobiles seemed to be growing. The sales managers could not understand why green cars were not selling, but decided to give incentives to dealerships that could move the green cars. As the green cars began to sell, the purchasing and manufacturing side of the business (unaware of the sales promotion) only saw material inventory data, believed that green cars were becoming more popular, and planned for even more production, intensifying the original problem. Obviously, well-coordinated supply chain intelligence would've been helpful in this situation. (For more information on Lee's comments, see the box below center.)

One of the most anticipated addresses at the Conference was that of former CIA Director Robert M. Gates, who gave the keynote address at Monday's luncheon. And he did not disappoint. Though he began his program on a light note (commenting that he came from Washington, D.C., "the land where those who travel the high road of humility encounter little heavy traffic"), his address quickly became serious as he discussed the events of September 11, the first foreign-based attacks on the continental United States since 1812. Gates somberly told the group that despite extra security measures being taken, it would not be surprising for more attacks to occur.

"The terrorist threat of today is different than it was 30 years ago," said Gates. Because the groups are driven by fanaticism, and not sponsored by specific governments, they are more nimble and entrepreneurial in nature. That, combined with the advanced weapons to which they have access, makes them even more dangerous. More terrorism attempts are likely, he said, but don't underestimate the power of the United States to thwart such actions. He cited several instances where intelligence was able to prevent catastrophes throughout the 1990s, such as terrorists' plans to attack a federal building in New York, attacks on the Lincoln and Holland tunnels, and a planned attack on Los Angeles International Airport on New Year's Eve, 1999.

Concerning risks associated with global commerce, Gates said he does not believe that it is significantly riskier to conduct business in foreign lands now than it was before September 11, thanks to extra security precautions and the enormous potential threat that we pose to others. He said, "It may even be safer, because the United States of America is at war and in a bad mood." For more information on Gates' comments, see the box below.

In addition to the ISM Semiannual Economic Forecast for both manufacturing and non-manufacturing that was presented Tuesday morning, two leading economists gave their views of current conditions and the months ahead. Scott F. Grannis, director and chief economist for Western Asset Management Company, said that he takes a "bond's-eye view of the economy," trying to stay focused on the long term. He spoke of the impact that the Enron situation will have on corporations, as many try to de-leverage their balance sheets and keep everything out in the open. In the short term, this might keep people from investing, because the numbers are conservative, but that's more beneficial for the long term. Grannis also spoke of a company's inability to raise prices, subsequently making supply management contributions even more important to the bottomline.

Rosanne Cahn, economist from eCAHNomics, gave her prediction that the nation's economic recovery will be slower than in past recessions and spoke of the "firing your customer" concept. When companies lay off individuals, they are contributing to lower consumer spending, thus compounding problems that might have led to the original layoffs. The cycle is broken if the public is able to continue spending money until industry feels secure in rehiring.

The Conference's closing keynote speaker was Maureen Merkle, vice president of strategic sourcing for SBC Communications, Inc. Merkle shared her supply management organization's success and attributed it to several key factors, illustrated by the acronym LEOPARDS. She said that "effective Leadership with a strong Ethical conviction, constantly striving to enhance Organizational effectiveness by streamlining Process, ensuring Accountability, monitoring Results, and making Decisions in line with client needs, supplier constraints, and market timing is a path to Success."

To find more highlights from the San Francisco Conference, visit the Daily Cable on the ISM Web site at: www.ism.ws/Conferences/OnlineDaily0502.cfm. You can download the Conference proceedings and find handouts from most of the educational workshops. While you're there, be sure to mark the dates of ISM's next International Conference. This train is headed to Nashville, Tennessee. We'll see you May 18-21, 2003, at the Opryland Hotel. Watch your mailbox for more information on this great opportunity.

Power Conference

In addition to the general sessions and the nearly 100 workshops available at the Conference, some top supply management executives were invited to attend the ISM Power Conference, a series of sessions where they were able to network, share insights, and converse with some of the Conference's keynote speakers and leading-edge presenters.

For example, after his general session, Professor Hau L. Lee spoke to the group and discussed, among other things, performance measurements. He said that the areas of interface between supply chain links are the most vulnerable for not being measured, and thus performing poorly. Furthermore, supply management should inherit responsibility for performance further down the chain because then they [supply managers] will have incentives to assist those partners.

During his Power Conference session, former CIA Director Robert M. Gates fielded questions about the nation's future. When asked what leaders in business and industry could do to aid security measures, he said because businesses know best where channels are vulnerable, the greatest contribution would be for businesses, trade associations, and the government to work together to identify and implement needed security measures. Unfortunately, the government agencies are often viewed as more of a policing body than a partner in improvements.

Other speakers at the Power Conference included Robert Monczka, Ph.D., C.P.M., director of Project 10X, CAPS Research, Joseph L. Cavinato, Ph.D., C.P.M., senior vice president and ISM Distinguished Professor of Supply Management, and Andrew Cox, Ph.D., chairman and CEO of the Centre for Business Praxis, Robertson Cox, Ltd., and Chartered Institute of Purchasing and Supply (CIPS) Professor of Business Strategy and Procurement, Birmingham (U.K.) University Business School.

To contact the author or sources mentioned in this article, please send an e-mail to author@ism.ws.

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