Editor's note: This column has been adapted from a keynote speech given by Council of Supply Chain Management Professionals (CSCMP) Chairman Kevin Smith at the Panama Logistics Summit 2016 on March 11, 2016.
Supply chains are global, and supply chain activities are all around us. And yet they are nearly invisible. Most of the world takes what we do for granted. The efficient movement of goods and the seamless, endless supply of food, water, and clothing are simply "expected." In some ways, supply chains are viewed in the same way as public utilities. When you flip the switch on the wall, you expect the lights to come on. When you turn on the tap, you expect water to come streaming out.
It is when things fail to happen as expected that utilities get attention, and so it is with supply chains. The most attention that any of us get from the C-suite is on those rare occasions when things don't go exactly right. In fact, if I learned only one thing in over 40 years in this industry, it is that we get people's attention most when things do not go as planned. But ours is an industry of risk, resilience, and recovery as much as it is one of planning and execution. We are operators, but we are also problem solvers.
And make no mistake—supply chains are also critical enablers of the world's economies. The ability to source raw materials, convert those materials into a desirable product, move them close to a specific market, and supply the end consumer at an acceptable price is the key to success in commercial markets. To be able to source, make, move, and sell products in the right quantities, at the right time, in the right place, and at the right price is magic in itself. Businesses love magic!
Contributions to top and bottom linesThis is never more apparent than in an economic downturn. In the years after 2008, now referred to as "the Great Recession," supply chains were often quietly recognized as the saviors of companies because of their ability to contribute to both the top and bottom lines of the balance sheet.
Supply chains are able to contribute to the top line primarily through carefully cultivated relationships with commercial partners. Suppliers and their customers are not merely connected by sales people and buyers. Some of the most complex and robust connections between companies exist in the supply chain arena where, day in and day out, logistics professionals orchestrate the never-ending flow of goods between partners. Not surprisingly, when times get tough, many buying decisions are made based on how easy it is to deal with a supplier. Good collaborators often become the default supplier of choice. That is how the supply chain can influence the top line.
On the bottom line, supply chain managers are among the best at saving money and reducing operating costs. It is what we do. And simply put, a dollar saved on the bottom line is worth a dollar in profit—one for one. In a business with a 33 percent margin you must sell $3 worth of goods to produce $1 in profit. In a strained economy, the ability to save money on the bottom line and preserve revenue on the top line is a marvelous feat.
A career in the supply chain industry is one of the most important and rewarding callings that exist. Supply chains are the secret operations that make the world a better place. Supply chains improve the standard of living around the world. More food reaches the table in an edible condition and less goes to waste because of supply chains. More potable water is available because of sustainable practices brought forward by supply chains. Electricity and fuels are more readily available because of the efforts put forth by supply chains. Supply chains quietly, but absolutely, affect people's lives.
I didn't know any of this when I started working over 40 years ago. It took me an incredibly long time to come to the realization that what we do is critical to the welfare of the planet's 7 billion-plus human beings and vital to the economies of the world's nearly 200 countries.
Logistics activities in the United States alone were valued at US$1.45 trillion and accounted for 8.3 percent of nominal gross domestic product (GDP) in 2014, according to last year's CSCMP State of Logistics Report. And, the reality is that the balance of GDP is totally dependent on supply chains to move and deliver goods and services to consumers. So, is supply chain management important? Is what we do important? You bet it is!
How CSCMP supports career developmentCSCMP is committed to providing supply chain professionals with assistance throughout their careers. We facilitate connections between our members and other supply chain professionals who can help solve problems or offer advice. CSCMP provides educational opportunities and programs to develop specific skills and expertise. We have an aggressive "lifecycle" objective at CSCMP to provide career advice and assistance to supply chain professionals when they are students, young professionals, mid-career practitioners, senior leaders, and, finally, like me, senior fellows. I like say that we want to involve and serve people in supply chain from "dorm living to assisted living."
CSCMP can achieve this goal. Through general educational offerings, customized programs for member companies, research, white papers, and mentoring opportunities, CSCMP has something for everyone at every stage of his or her career. If you are already a member of CSCMP, thank you. If you are not, I hope that you will become a member soon and begin taking advantage of the benefits that come with membership.
I'm looking forward to the great things ahead of us as an industry. I also believe that CSCMP can be a catalyst to help build supply chain careers and continue to make our world a better place in which to live.
