VentureOutsource.com talks with Lisa Martin, board chair for the Institute for Supply Management (ISM) (www.ism.ws).
Ms. Martin is also vice president, global sourcing, with Pfizer.
ISM is the largest supply management association in the world with a mission to lead the supply management profession through its standards of excellence, research, promotional activities, and education. Transcripts from that discussion follow.
VO: In 1955, more than one-half of the world’s manufacturing took place in the United States. Today, the US performs only a portion of the world’s manufacturing yet the US has the highest concentration of OEM companies in the world. As organizations become more global, this internationalization translates to companies with extended international supply chains. Beyond US borders, other countries also have companies engaging in cross-boarder commerce with global supply chains. As supply chains worldwide become broader in scope and more complex, what do you feel are the most important criteria, or metrics, supply chain executives should put in place to measure whether or not their supply chains are successful, and why?
Martin: Effective strategic supply chain measures should include:
- Price/cost measures
- Revenue measures
- Inventory measures
- Workforce measures
- Supplier performance measures
- Customer satisfaction measures
Supply chain performance measures must be aligned vertically with corporate goals and horizontally with other strategic business units within organizations. Supply measures must also be supported by the organization’s top leadership.
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Lisa Martin Board Chair Institute for Supply Management (ISM) |
Supply measures must be transparent and communicated clearly to others throughout the organization and must be supported with the appropriate levels of resources, including any internal systems needed.
Supply chain measures must also be closely tied to performance-based incentives.
VO: Innovation provides a crucial edge as competition intensifies across markets and industries. Executives looking outside their corporate walls can gain access to technology they may not have from within their firms. Can you please discuss with our readers two (2) recently-developed technology-driven supply chain management tools designed to help executives obtain greater visibility and gain more control over their supply chains, and why you feel each application is noteworthy?
Martin: Spend management systems and integrated supplier/contract manufacturer collaboration.
Spend management systems provide a suite of tools that work in an integrated fashion to provide procure-to-pay consistent processes. These contemporary tools include the ability to conduct e-sourcing, collaborative contract authoring, specific category procurement and enhanced data visibility.
In addition to driving compliance with preferred suppliers and reducing overall cycle time, these tool sets ensure compliance with a company’s preferred procurement-to-pay methods.
VO: VentureOutsource.com’s latest industry survey revealed the majority of companies surveyed are concerned about how they can differentiate their company from competitors in the marketplace. What role do supply chains have in how companies are perceived differently in the marketplace, and by customers, and what role does the Institute for Supply Management (ISM) play in helping organizations along this path toward differentiation?
Martin: Supply management activities directly impact the business’ profitability and operational success. The more efficient the supply chain, the better the organizational performance and ultimately the more positive the image of the company within its respective marketplace.
Supply management professionals can directly mitigate supply chain risks, capitalize on opportunities in emerging markets, strengthen relationships with strategic suppliers and fully harness their companies’ buying power. We, as supply chain professionals, review our organizational structures to ensure a proper balance between scale, leverage and speed, and diversify our teams to match the increasingly multi-cultural dimensions to our work.
Institute for Supply Management (ISM) plays an important role preparing supply management professionals with new skills and competencies. In addition to seminar offerings, our annual conference and customized onsite training, ISM will be launching a new credentialing program in 2008. The Certified Professional in Supply Management (CPSM) qualification is designed to recognize the expanded education, skills, and experiences today’s supply professionals must have in order to effectively implement innovative supply strategies throughout their organization, both domestically and internationally.
VO: What are your thoughts on sustaining the current level of fueling global growth as the world moves toward a diversified global economy, and whether or not growth can be sustained, as reliance on the United States starts to diminish with emerging economic superpowers such as China and India still growing strong in their expansion?
Martin: Throughout history the United States has always played a critical role in the global economy, although that role continues to evolve over time. It is estimated that more than 6.5 million Americans work for foreign companies.
As for U.S. companies operating overseas, there are several challenges with offshoring, including possible lack of control over quality of service and products delivered; maintaining corporate culture, legal and regulatory differences, and knowledge transfer and cultural barriers. Demand for raw materials and energy continue to increase, but unrest in some key producing regions of the globe threatens supply.
Survey results released a few years ago by business consultant McKinsey & Company indicated 80 percent of the more than 7,000 senior executives surveyed worldwide feel global outsourcing is good for the economy. However, when asked about the effects of global outsourcing on their own business, only a little more than half of U.S. executives felt the effects were either somewhat positive or, very positive.
VO: Companies must be aware of social and political trends as they develop corporate strategy. Environmental compliance, or eco-friendly, mandates have taken a prominent spot on the global stage. How can companies create value by aligning strategic decisions with a shifting social and political landscape? How does ISM contribute in this area?
Martin: One key contribution ISM has made in this area is its ongoing social responsibility initiative. More than four years ago, ISM developed Seven Principles of Social Responsibility that comprise a framework of socially responsible practices for supply management professionals.
ISM’s board of directors recognized although many companies have their own standards in place for corporate-wide behavior, supply professionals are in key positions to contribute to the implementation of socially responsible supply chain practices within their organizations and the suppliers they work with. Since the initial release, many Fortune 500 companies have endorsed the Principles.
ISM is committed to becoming the central repository of information in support of matters related to social responsibility and works to encourage the supply management community to share information on their current practices.
VO: Outsourcing and offshore product manufacturing is not always part of the solution for every company (US-based or not). Meanwhile, it’s probably safe to say companies have been outsourcing at least portions of their product supply chains since the beginning of commerce. What have you witnessed with regards to outsourcing or offshore manufacturing as it relates to international trade and the quality of goods and services, and the economic standing of organizations?
Martin: With ongoing demand from consumers for products and services at the lowest possible price, offshoring continues to be one of many sourcing decisions business entities must make in support of the business’ overall strategic goals.
Outsourcing overseas is not a new phenomenon. Business entities have been offshoring for decades with the exodus of jobs making shoes, electronics, and toys going to developing countries.
In addition to offshoring, for many years, businesses have been shifting work from one location in the U.S. to other U.S. locations in order to help lower operational costs.
For some industries and businesses, offshoring is inevitable and will benefit both the business entity and ultimately the consumers by increasing efficiency; increasing return on investment (ROI), and lowering costs.
To remain competitive, and sometimes for their basic survival, some businesses must outsource overseas (offshoring) or face closing their doors.
For other business entities or situations, offshoring may not be the best decision to meet the overall strategic goals. Offshoring also supports and sometimes enables a company’s desire to build relationships in critical emerging markets.
VO: If you could have a dinner conversation with anyone (currently alive, deceased, or fictional), who would you select?
Martin: Ervin “Magic” Johnson. I was a huge Lakers basketball fan in the 1980s and 1990s and truly admire his competitive spirit and leadership.
The business acumen Magic has demonstrated, coupled with a focus on inner-city development, has earned my respect. His ability and willingness to contribute to society in such a positive manner while living with HIV serves as an inspiration to me.
VO: Thank you, Lisa.
Martin: You’re welcome. Thank you.
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