The Opinion Page
News and comments about the issues facing today's SCM and Inventory Management professionals.
In the field of sports, overly-eager reporters and assorted talking heads tend to quickly label the latest flash-in-the-pan as "The Greatest Ever". "This guy is a phenom." "He is the Second Coming", and other superlatives are frequently used to describe an individual whose accomplishments are too often short-lived. Rare indeed are the Bobby Orrs, the Wayne Gretzkys, the Jim Browns, the Johnny Unitases, and the Mickey Mantles of this world, who truly deserve the moniker "Superstar".
I was fortunate, early in my career, to have worked with a modest superstar of operations and supply chain management. His name was David Chapman. Mr. Chapman (I could never call him David - he deserved too much respect) was a truly unsung visionary. Working with North America's largest retailer, Mr. Chapman envisioned, created, and implemented some of the most progressive SCM and Inventory Management systems known to retailing. He was ahead of Wal-Mart. The only constraint that he faced was that of available information technology. Mr. Chapman, without knowing it, shaped many of my attitudes to SCM and Inventory Management: virtually anything is possible if you expand your mind and embrace creative energy.
A more famous Superstar in OM circles was William Edwards Deming. Like Mr. Chapman, he dared to buck the trends and the conventional wisdoms which infected North American business leadership in the post-WWII era, and which still torment Western economies today. If all you have ever heard of Deming is a stray comment or two at a cocktail party (something like "wasn't he that weird statistician with the red beads?"), you owe it to yourself to get to know him.
I very much recommend a book written by Mary Walton in 1986 called "The Deming Management Method". It is an easy read, but very insightful. She covers many of the important points in his teachings, without getting bogged down in the minutae (a very easy thing to do when it comes to Deming).
Mr. Deming lived from October 14, 1900 to December 20, 1993. He was an American statistician, professor, author, lecturer, and consultant. He worked in the post-War years with Japanese businesses to improve product quality through various methods including statistical process control and the concept of continuous improvement. Considered a hero in Japan, his genius was considerably overlooked in the USA until late is his life.
One of his enduring contributions to Quality Management were his Fourteen Points. These were a set of principles which outlined the foundation of his philosophy. (There were not always 14 points - in the 1970's, there were only 10!)
In my forthcoming posts, I will discuss some of the 14 points, and how they might relate to our businesses and lives today.
"Export anything to a friendly country, except American management."
W. Edwards Deming
"Learning is not compulsory...neither is survival"
W. Edwards Deming
Question: "But what if we train and educate our supply chain people and they leave?"
Answer: "Worse yet, what if we do not train and educate them and they stay?"
Spring is here, and as we enjoy the beautiful weather, we are reminded that summer is just around the corner. Many of us will be investing a little money on home improvements – perhaps a new deck, or some landscaping, or a new front walkway, or new shingles on the roof. Some such improvements come at a hefty price, others can cost very little. But most are meant to make life a little more pleasant, perhaps a little easier, or might add value to your home.
How about adding some major value to your resume, or improving your professional credentials? Are you employed in operations and supply chain management? Do you want to make a career move into this exciting and demanding profession? Why not earn more money, advance up the ladder, make a bigger contribution, get more recognition for your work, and find more satisfaction in your job? And why not promise yourself that you are going to start right away? Stop travelling along that gravel road. You can pave your career path with a professional designation in Supply Chain Management, Operations Management, or Logistics, such as CPIM or CSCP.
There are myriad high-quality providers of education and training in North America, and your area of focus ought to be governed by that aspect of SCM that appeals to you most. I tend to favour the APICS-conferred CPIM and CSCP designations, as my areas of professional interest are inventory and operations management. But those companies who focus on transportation might want their employees to pursue the CITT designation, equal in prestige to CPIM, but focused on Logistics and Physical Distribution. Professional purchasing agents gravitate to C.P.P. (Certified Professional Purchaser) offered by the PMAC. SCM Executives are well-advised to pursue PLog or CSCP designations. The opportunities are too broad to list here.
Since 1973, the CPIM program has educated more than 100,000 manufacturing professionals on essential terminology, concepts, and strategies related to demand management, procurement and supplier planning, material requirements planning, capacity requirements planning, sales and operations planning, master scheduling, performance measurements, supplier relationships, quality control, and continuous improvement.
Attaining the CPIM professional designation, or other equivalent designations, carry many tangible benefits.
My Top Five list is:
1. Increased salary potential: Recent studies published in MM&D, Transportation & Logistics and Purchasing b2b Magazines show that a professional designation such as CPIM increases reported salary levels by significant levels, often over 10%. The 2006 Salary Survey published in MM&D Magazine in October 2006 showed that those who claimed to have APICS Certification reported average salaries of $90,504 versus those with only a University undergraduate degree of $80,216, and compared to those with a Community College diploma of $72,597. It seems that the CPIM designation can easily pay for itself!
2. Increased potential for career advancement: The PMAC Salary Survey published in November 2009 showed that 73% of respondents listed their employers as being increasingly aware of supply chain professionals, that 71% of respondents agreed that the current recession has made their employers appreciate their skills more, and that 2 out of 3 employers actually pay for full certification programs! (A higher percentage will pay for relevant courses). In this same 2009 survey, 72% of respondents agreed with the statement “For me to get ahead in my job, I really should have a professional designation”. One respondent to the same question in a 2006 survey commented “I found that when I did not have my credentials, that I was overlooked for new roles and positions even though I was quite capable of performing the task.”
3. A Better Resume: For those who are “on the move” in their careers, or looking for greener pastures, the CPIM designation serves as a great tool to set you apart from the pack. The current labour market is heated, and participants need every advantage to differentiate themselves from their competitors. When highlighted on your resume, along with a University Degree or College Diploma, your application to work with a new firm has a much better chance at being put on the top of the pile. Further, employers will see that you are willing and driven to improve your skills through lifelong learning.
4. You will learn from the best!: APICS training and education is readily acknowledged and recognized as being World Class. The APICS Body of Knowledge is second to none. Very few organizations have the resources to develop and own such knowledge “in house” – it is not a core competency for most. At APICS, education is what we do, and why we exist! You can be confident that APICS-provided education is recognized and valued around the world.
5. You can make a better contribution: We all want to make a contribution to our employers and our companies. We want to feel appreciated and valued as an employee. We want our companies to succeed and prosper. By pursuing the CPIM designation, you will increase your functional knowledge of production and inventory management. You will be able to predict outcomes more accurately. You will be able to increase efficiency across the processes of your organization’s supply chain. And you will be able to increase profitability by optimizing your firm’s inventory investment.
You should, as an individual or as a company, start to enjoy the benefits of professional designations for yourself or your employees as soon as possible. The Durham APICS Chapter, for example, offers CPIM examination preparation courses on Saturdays throughout the year.
Don’t delay! Start a new beginning today!
Please take a few moments to visit our new "Upcoming Events" section on this web site. It will highlight some extra-special events that are to take place in the Durham Region of Ontario, as well as the occasional International Event. Enjoy!
Many operations management practitioners are familiar with the concept of cycle counting. It is an important procedure in the OM practitioner's tool box to help improve inventory record accuracy.
To avoid any ambiguity, the APICS Dictionary defines Cycle Counting as follows:
"An inventory accuracy audit technique where inventory is counted on a cyclic schedule rather than once per year. A cycle inventory count is usually taken on a regular, defined basis (often more frequently for high-value or fast=moving items, and less frquently for low-value or slow-moving items). Most effective cycle counting systems require the counting of a certian number of items every workday with each item counted on a prescribed frequency. The key purpose of cycle counting is to identify items in error, thus triggering research, identification, and elimination of the cause of error."
It is the last sentence where many firms fail to properly execute the spirit of cycle counting. More on this later.
The importance of inventory record accuracy ought to be self-evident. Without accurate inventory records, customer service and sales lose visibility of what is available for sale. Inventory Managers will order either insufficient stock, or will unknowingly order surplus. Confidence interally and exterally becomes shaken. Customers become disappointed. Finance gets angry. Warehouse personnel get frustrated. The list goes on.
A mentor of mine years ago, for whom I have great respect, used to express her fear that the more one counted an item, the worse inventory record accuracy became. There is more than a grain of truth to that assertion.
Cycle counting must respect similar cut-off rules as are observed in an annual physical inventory that has been well done. Pending inbound shipments need to be identified and accounted for in the counts, Pending outgoing customer orders need to be identified and accounted for in the count. Stock needs to be located properly in the warehouse. And samples need to have been listed and included in any counts, if they are saleable inventory. Broken and otherwise unusable inventory needs to be written off and excluded from the count.
Adjustment of the inventory record to the physical count needs to be done. But too many firms stop there. It is critical, as per the last sentence in the definition above, that the cycle count team investigate and identify the root cause of the error, and ensure that it does not happen again,. This might mean adjusting internal business processes or make demands of external partners that would require the assistance of Senior Management. But until the root cause is addressed, the problem will continue to pose problems.
What other issues might cause a cycle count program to fail? A few land mines to avoid:
- inexperienced staff, who are not familiar with the product(s) have difficulty counting properly
- failure to devote sufficient resource to the program
- kicking off the program during a period of peak activity (sales, outbound or inbound shipments).
- poor stock locator systems
- a messy warehouse
- failure to promptly write off and dispose of unsaleable inventory- staff who have been insulated from business processes outside of the warehouse's four walls. Staff need to appreciate the impact of poor inventory record accuracy and need to have some basic understanding of business processes outside of the warehouse.
- lack of support and follow-up by senior management.
It can be done!
John Skelton is the Principal Consultant and founder of Strategic Inventory Management.