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Purchasing Skills Evolve as Supply Chain Issues Change

The education, skills, and training that electronics buyers today need to succeed in purchasing and supply chain management have evolved over the past 10-15 years as the issues facing the electronics industry have changed.

To advance in supplier management today, buyers need a strong education as well as continuous training in order to identify emerging supply chain issues and develop strategies to manage them. Supply chain executives and professional associations say purchasers are often best served with a combination of broad-based business and supply chain skills, technical expertise, and in-depth knowledge of their industry if they expect to climb up the supply chain ladder.

It all starts with education. A college degree, of course, is virtually mandatory. A business degree is good, but an MBA is better. In fact, some large OEMS hire PhDs for certain supply organization positions.

Many large companies, such as Cisco Systems, like to hire graduates with degrees in supply chain management. “I am impressed with the individuals who come from a supply chain education background,” said Norm DePeau, director, global supply management for Cisco, based in San Jose, Calif. “The caliber of talent we are seeing is outstanding at both the undergraduate and graduate level.”

DePeau noted that Cisco recruits from Arizona State University of Michigan, Cal Poly, University of San Diego, and University of California at San Diego for its supply chain operation. “We have an affinity for MIT because of their Leaders for Manufacturing (LFM) program,” which focuses on lean manufacturing and supply chain management.

“LFM graduates often have five years experience. These are solid supply chain professionals,” said DePeau.

Buyers looking to work in procurement engineering or to be involved with design engineers and product development should have an electrical engineering (EE) degree. Purchasers wanting to climb to the highest echelon in supplier management at a large electronics OEM would be best served with an MBA and a technical degree, as many purchasing directors at major electronics OEMs often have both.

PhDs wanted

Cisco, for instance, hires “technologists” for its optics and specialty technology group which “represents the pinnacle of technical expertise that we are looking for,” said DePeau. “We actually hire PhDs in our supply chain environment for optics and specialty technology group. The group provides sourcing for all optics related components, including liquid crystal displays and for hard disk drives among other products.”

Not all commodity managers are electrical engineers, though most have technical degrees. “Most GSM commodity managers and central team resources hold a minimum of a bachelor’s degree in an engineering discipline, and a significant number hold masters degrees in business (MBAs) or in a technical discipline,” DePeau commented.

GSM employees who are not specialized in a technology, and are more generalists with business backgrounds, have more horizontal flexibility in Cisco’s supply chain management organization.

“You are more likely perhaps to be promoted and to advance to management positions. However, our most senior managers have engineering backgrounds,” said DePeau.

OEM supply chain executives and professional organizations say that while having a PhD, an EE degree, a degree in supply chain management, or an MBA may be required for certain positions, they are no guarantee for advancement.

Degrees can help, but a lot depends on the individual, said Scott Sturzl, vice president, education at the Institute of Supply Management (ISM) and vice president, A.T. Kearney Center for Strategic Supply Leadership.

“Much of the success of an individual is based upon their ability to influence others, communicate effectively, understand business, understand finance and being able to talk the language of the suppliers and internal people that they support,” Sturzl explained.

Lifetime career learning

Besides a degree, buyers looking to advance need to get as much training as possible during the course of their careers. Most companies offer internal training on everything from negotiations to Six Sigma.

“We do a lot of training concerning collaboration, meaning how we collaborate with other parts of Cisco,” said Norm DePeau, director, global supplier management for Cisco Systems.
“Negotiation training is probably the most requested training we get,” added DePeau. “People in supplier management receive negotiation training when they are hired and once a year we re-do negotiations training.”

For instance, Cisco’s last negotiations training dealt with “backdoor selling.” That is when Cisco suppliers try to get themselves designed into a new product without involving supplier management. The training dealt with how to avoid that from happening and helping design engineer understand the impact of backdoor selling on Cisco's long-term profitability, according to DePeau.

Besides negotiation, Cisco also does internal training for Six Sigma, environmental issues involving the supply chain, supplier diversity, and social responsibility.

“We also do a lot of training concerning collaboration, meaning how we collaborate with other parts of Cisco. We have a large organization and it is easy, if you don't use the tools that we have, to become very siloed,” DePeau commented.

While buyers should take advantage of internal training opportunities, they can also get training from professional organizations such as the Institute of Supply Management, the American Purchasing Society, and the Association for Operations Management. Such organizations offer training and certifications. For instance, ISM offers certifications for Certified Professional in Supplier Management (CPSM), and Certified Professional in Supplier Diversity (CPSD). The ISM also recertifies buyers to Certified Purchasing Manager (CPM).

Certification means more money

Salary surveys conducted by trade magazines over the years have shown that buyers with professional organization certifications often have higher salaries than buyers who are not certified. For example, a 2009 survey by Purchasing Magazine found that buyers with a CPM certification made on average of $106,157, while a buyer without such certification made $90,633.

“Forward thinking HR departments look not only for a formal education, but for certification designations," said Sturzl.

“I am more and more convinced the value of having people certified as CPM or CPSM is that they speak the same language,” Tom Linton, former chief procurement officer at LG Electronics, Agere Systems and Freescale.
Tom Linton, former chief procurement officer at LG Electronics, Agere Systems, and Freescale, said certifications and an MBA are a good combination for a buyer looking to advance.

“I am more and more convinced that the value of having people “certified” as CPM or CPSM is that they speak the same language,” Linton said. “An MBA from a top supply chain school shows the person has an interest and a measure of capability. For that reason, I tend to lean towards people now who have these degrees.” He added that while a degree or a certification is no guarantee of success, “it is a step forward for those who are thinking of a career in purchasing or supply chain.”

“If a buyer wants to advance to supervisor or purchasing manager position, certifications can only help a purchaser climb up the ladder,” said Jerri Kapelka, manager, professional credentials for the ISM. She has CPSM and CPSD credentials.

Kapelka added that certifications show your company “you are spending the time to educate yourself and to become better at your job,” which can only help advance a career.

Kapelka went on to say that achieving certifications helps a buyer to have more rounded purchasing skills and thereby become more competitive in the job market.

“If you don’t have those credentials and education, you're opening yourself up to someone who does and you may lose out on a position," Kapelka said.

Know your industry issues

While professional certifications can help a buyer advance, it is also important for a buyer to have an in-depth knowledge of the electronics industry and the challenging supply chain issues the industry faces.

The issues have changed over the years and include social responsibility, supplier diversity, supply chain risk management, environmental laws, regulations such as RoHS, WEEE, and REACH, and conflict minerals to name a few.

Some issues did not exist 10-15 years ago, while others were not emphasized as much as they are today.

“Who was talking about the concept of conflict metals five or 10 years ago unless you were in the jewelry business?” asked Sturzl. “I can assure you conflict minerals are being talked about in places across industries across current country boundaries.”

Conflict minerals has been a front-and-center issue in the electronics industry over the last several years because tantalum, gold, tungsten, and tin have been illegally mined in the Republic of Congo, with proceeds used by rebels to wage civil war that has killed millions. As a result, electronics companies do not want to buy components that contain conflict minerals. That means buyers have to be schooled about their suppliers’ suppliers and the source of materials being used in components and other production materials.

That is also true with other social responsibility issues. Most electronics OEMs have social responsibility codes of conduct that govern how they do business and how they treat employees. For instance, most codes of conduct state that the company will not use child labor or force workers to work excessive overtime or under oppressive working conditions.

While many large global OEMs strictly follow such codes of conduct, sometimes their suppliers do not. Buyers often have the challenge to make sure their companies’ suppliers buy into the code of conduct and adhere to it.

Besides the human moral issue, if a supplier exploits or abuses workers or uses child labor, it can result in unfavorable publicity for an OEM and have a negative impact on the company's bottom line.

Social responsibility was not as much of an issue 10 years ago, but as companies have outsourced further, the issue got more attention and has added to the responsibility of electronics buyers.

“The scope of what needs to be known by buyers and frankly the depth within that scope gets wider and deeper and more complicated all the time,” said Sturzl. An example is supplier diversity.

Sturzl commented that many companies in the U.S. have a strong focus on using diverse suppliers, and many companies routinely use minority or woman-owned suppliers.

However, the electronics business is global, and the challenge for buyers is identifying diverse suppliers in other countries and transferring diversity policies and diversity spends into multiple countries, according to Sturzl.

Complicating the diversity issue is the fact that many companies are trying to reduce their number of suppliers, while increasing their number of diversity suppliers.

“So you have to deal with this tension involving conflicting goals and objectives,” said Sturzl.

Supply chain executives say the issues impacting the supply chain will continue to evolve and pose challenges for buyers and other supply chain professionals. Those in the supply chain with a broad base of business skills and a technical background will be in the best position to face those challenges and advance in their careers.