Council of Logistics Management
In search of an Identity What is Supply Chain Management Anyway?
Supply chain management is the new buzzword on the block. But is it really different from good old logistics? The definition I use goes something like this: logistics encompasses everything involved in getting the right product to the right place at the right time and at the right cost, the customer’s requirement being implicit.
For the supply chain, that’s everything from dirt-to-dirt as they say in the food industry, or from molecule to cure in pharmaceuticals, from sand to the internet. Logistics is all of that, but just the parts that are within your company’s four walls require your direct control. Thus, I often use the two terms almost interchangeably.
So is outsourcing driving supply chain management onto the map? You bet! Is supply chain management a dramatic revolution in the way we think about conducting our affairs? Probably not. But the logistics profession has not yet decided whether business logistics or logistics support are two separate issues, or separate facets of the same business discipline. So supply chain management starts life with a serious identity problem. Reading the literature, you wonder if many even understand this paradox.
Like the revolution of business promised by Electronic Data Interchange (EDI), the same group have given themselves a new name - Electronic Commerce (EC) and a new promise to revolutionize the way we do business. EC, like supply chain management, is neither clearly defined nor universally understood and the value it represents is perceived as an additional channel to sell through.
How is supply chain management going to make it onto the map and resist falling into “the last year’s buzzword park for dead elephants”?
The success lies in areas such as Finance that have a standard approach called General Accounting Procedures (GAP), maintained by a powerful organization known as Financial & Accounting Standards Board (FASB), or “fasbee” to intimates. The success of Materials Requirements Planning (MRP) lies in a standard approach and vocabulary, and a clear way to measure success (Class A certification in Distribution Requirements Planning [M/DRP]). Excellence in MRP and, to a certain degree, manufacturing, is shepherded by American Production and Inventory Control Society (APICS) and the many country declinations across the globe. Success in the quality movement is sanctioned by International Standards Organization/American National Standards Institute (ISO/ANSI) certification, and crowned by the Malcolm Baldridge Award. Logistics does not yet have its set of standards, and logisticians still relate to “nuts & bolts” like fill rates and freight rates.
A lot of ground must be covered for logistics to have its standards and unanimous measures of success. The trade is transmitted by anecdote, much like the tribal values were handed down around the camp fire.
Being a fellow of the Society of Logistics Engineers (SOLE) is indeed a high distinction, but regrettably, only in certain circles, notably, Aeronautics and Arms. Being a Certified Professional Logistician (CPL) in Canada represents a clear level of technical expertise. But this is only recognized in certain Canadian circles. The European Normalization (CEN) initiative has defined competencies by job profile, and laid out training courses to reach European certification at each level. The French logistics organizational certification is another approach that has its followers, inspired by the Volvo/Renault supplier certification programs, whereby organizations self-assess, or have an outside consultant assess, or have their major customers assess, their logistics competency and capacity. There is no global, or even North American standard. So logistics remains a domain of skilled artisans, practising an arcane trade that is learnt by apprenticeship, anecdote and experience.
There have been some tactical successes. Standard cases drive optimization of these engineered guidelines, and ease mix and match material handling challenges. The promise of the Supply-Chain Operations Reference-model (SCOR) initiative, for example, is to provide a standard terminology, standard processes, standard performance metrics, standards of excellence - sometimes called benchmarks - at a management level. Standard levels of competence and standard proficiency courses are missing. But the Commission for CPL and European Normalization (CEN) initiatives are clearly solid foundations. SCOR doesn’t address retailing, or multi-modal international transportation properly. If the supply chain community uses this as an excuse to dither, then the profession will fail to deliver on the promise - we all know we could fulfill. We may have our successes - Efficient Consumer Response (ECR), Efficient Foodservice Response (EFR), Efficient Health Care Response (EHCR), Just In Time (JIT) - but our fate will be similar to EDIFACT and Esperanto - great ideas but no compelling reasons to adopt them across the board, no critical mass, and no perceptible downside for sitting in the spectator box. Is SCOR the only such initiative? Probably not. But if our community does not seize a viable and credible standardization banner of a continental dimension, we will not achieve the success we deserve and can achieve. The broadening reach of the purchasing and/or manufacturing associations will be downfall of the logistician, and we will be absorbed.
Since what you measure is what you get, let us measure our success in adopting and branding our supply chain standards in standard terminology, standard processes, standard performance metrics, standards of excellence standard, levels of competence and standard proficiency courses. Market penetration by company seems like a good metric, and maybe Stats Canada can help.
If you believe, like Robert V. Delaney of Cass Logistics, that we, the people, deserve supply chain excellence, this is part of the price to pay. But it won’t happen without solid adherence from the grass roots logistics community.