Abe Eshkenazi, CSCP, CPA, CAE
APICS CEO

Those of us in the APICS community know how efficient supply chain practices can leverage power across organizations. Healthcare organizations are no different in this respect, yet supply chain management in this industry remains largely underdeveloped. Perhaps now more than ever, as U.S. government leaders looks at ways to reform healthcare, supply chain management should play a central role.

Earlier this week, I read with interest “The State of Healthcare Logistics: Cost and Quality Improvement Opportunities,” a report published by the University of Arkansas and the Association for Healthcare Resource and Materials Management. In short, researchers found the healthcare supply chain to be immature, collaborative, strategic, expensive, information poor, and talent rich.

The study’s authors, Heather Nachtmann, Ph.D., and Edward Pohl, Ph.D., write the following in their foreword: “We do not know where the fundamental inefficiencies and associated costs subsist within the complex supply chain. We also do not know where the opportunities for the greatest increases in quality exist within the healthcare supply chain. This lack of knowledge contributes to healthcare supply chain inefficiency.”

APICS has the tools, resources, and expertise to identify and overcome these challenges. Consider the drivers of supply chain performance, which are excerpted here from the APICS Operations Management Body of Knowledge Framework (OMBOK):

• Facilities—Supply chain performance is often affected by the design and location of facilities.
• Inventory—Inventory can improve supply chain flexibility by acting as a buffer to decouple supply from demand when appropriate.
• Transportation—Transportation decisions can make major differences in both benefits and costs.
• Information—Another major influence on supply chain effectiveness is the ease with which information is shared up and down the chain.
• Sourcing—Sourcing decisions are important within the supply chain and rely on standards and policies being maintained.
• Pricing—Pricing is perhaps the most important strategic decision. Whether price is set high, low, or in the middle sends a strong message to all members of the supply chain, competitors, customers, suppliers, and potential new entrants.

Healthcare leaders have known about this supply chain inefficiency and opportunity for some time, yet they have been unable to make significant progress. In 1996, a group of experts crafted the study Efficient Healthcare Consumer Response (EHCR), which evaluated the supply chain as part of overall healthcare expense. EHCR still stands as a benchmark for the industry, but the goals seem as far away today as they were 14 years ago.

In last week’s edition of Operations Management Now, I mentioned the 2009 update of OMBOK, which will include an appendix that correlates the relevance of the framework’s topics to operations management professionals in healthcare and other nonmanufacturing industries. In addition, APICS is setting up online communities for those of you interested in networking with other operations and supply chain management professionals serving in nonmanufacturing environments. Your participation will be very important as we try to help APICS grow in relevance to these nontraditional industries. In addition, this kind of collaboration will further develop the APICS body of knowledge, enabling APICS to better serve you throughout your career.

Abe Eshkenazi, CSCP, CPA, CAE
APICS CEO

    Last week at the 2009 APICS International Conference & Expo, I had the pleasure of interacting with a group of students from Lakeshore Collegiate Institute—an Etobicoke, Ontario, high school located in a distribution district near Toronto. The school has a close relationship with the Canadian Supply Chain Sector Council (CSCSC) which sponsored the students’ participation in the APICS conference. Working together, Lakeshore Collegiate and the CSCSC are developing student interest in supply chain careers. 

    It is a challenge to define supply chain management (SCM) to high school students. Presenters working on the student program relied on the very simple and useful definition provided by the editors of the APICS OMBOK Framework: “balancing or synchronizing sup­ply with demand.”  Still, we needed to make supply chain come alive for them. How did we do it? We went retail: Wal-Mart, Nordstrom, Abercrombie & Fitch, Target. We followed the supply chain from source to delivery of a T-shirt.

    When I returned to the office, an APICS staffperson forwarded me a study conducted by Auburn College of Business and the Retail Industry Leaders Association. “The State of the Retail Supply Chain: Results and Findings of the 2009 Study” surveyed senior vice presidents, vice presidents, and directors responsible for SCM within major retail organizations. Questions explored the role of SCM in these companies, as well as the challenges and issues businesspeople are experiencing in this recession economy.

    In retail operations, critical supply chain capabilities, in order of importance, include supply chain cost control, in-stock on high-volume items, response to demand changes, executive engagement, store inventory coordination, and formal SCM organization. Of these capabilities, the biggest gap identified by respondents was in the area of visibility upstream to vendor operation. Sound familiar? Regardless of whether you practice SCM in the manufacturing, retail, healthcare, hospitality, or distribution industries, this is a challenge.

Beyond traditional

    This year, the Voice of the Customer and the Body of Knowledge Committees have been working with the APICS Board of Directors to determine which industries outside of manufacturing would benefit from APICS SCM education. Although terminology from industry to industry is different, ask a supply chain professional in any industry why upstream visibility is important, and he or she likely will provide the same answer as the APICS OMBOK Framework editors: “because the supply patterns do not match the demand patterns, inventory accumu­lates at various stages, and shortages and delays occur at others. Collaboration and communication among supply chain members is one way to minimize the impact. Information visibility in inventory levels, anticipated production, and material-in-transit are needed by supply chain members to successfully coordinate the supply chain.”

    With the 2009 update of the APICS OMBOK Framework due in December, you will find an appendix that maps the applicability of OMBOK topics to operations management professionals working in retail, distribution, healthcare services, utilities, and hospitality. The mapping was based on an APICS survey of non-APICS members serving these industries. The APICS Board of Directors has set a strategic priority to apply the APICS body of knowledge to these industries. The APICS OMBOK Framework survey is the first step.

    With this move, we are not abandoning our core constituents in manufacturing. In fact, we are working to ensure mobility in the careers of the members we serve. We hear over and over again that APICS education and certification provide the best foundation for supply chain careers across industries. Nearly 30 high school students in Toronto now can tell you—from the mining of crude oil in Venezuela for polyester to the stocking of T-shirts on Wal-Mart shelves, supply chain professionals are involved every step of the journey.

Abe Eshkenazi, CSCP, CPA, CAE
APICS CEO

    Traveling back from Toronto Wednesday, I picked up a copy of Newsweek. The issue features an article titled “Is ‘Buy American’ a Slogan worth Preserving?” The story presents the opinions of a panel of six experts—three argue that the “Buy American” legislation is beneficial and three counter that the policy will backfire. The impetus for the article is the impending trade dispute between the United States and China. Specifically, U.S. officials have announced tariffs on imported Chinese tires, while government officials in China are threatening to do the same with U.S. poultry coming to China.

    Dartmouth economist Douglas Irwin argues that there actually will be fewer construction projects because the U.S. economic stimulus requires the use of U.S.-made steel in those projects. He says, “Fewer jobs will be created with the limited amount of money we have to spend.”

    On the other side of the debate, Jeff Madrick, a fellow at the Schwartz Center for Economic Policy Analysis at the New School, asserts that most studies reveal a direct negative impact from free trade on wages and on the creation of jobs. “Exchange is the key to economic growth,” he says. “[But] fiscal policy becomes necessarily ineffective when 20 to 30 to 40 percent of every dollar we spend to pump up our economy in a recessionary emergency leaks overseas.”

    Although the Newsweek article analyzed the situation between the United States and China, the question of whether protectionism stimulates or stifles a nation’s economy affects countries all over the world. It was on the minds of many participants at the APICS 2009 International Conference & Expo, as well. The discussion is an extremely complex one, and I encourage you to read the entire Newsweek piece to get an understanding of the many viewpoints on this single subject.

Highlighting Global Ability

    This year, I was honored to speak to attendees at Monday’s general session. My message followed a powerful presentation of APICS stories—personal and professional triumphs from colleagues representing Canada; China; Egypt; Elkhart, Indiana; India; Italy; the Mexico-U.S. border; Poland; and South Africa. My goal was to show how the development of APICS as a professional society has closely followed the development of the global economy. I drew correlations between our growth as an organization, the growth of the United States and other global economies, and the development of trade agreements between countries.

    When addressing the challenges of an interconnected world, we need to be cautious in constructing tit-for-tat barriers to trade. At the same time, it is important that we operate on an even playing field that prohibits product dumping and price manipulation.

    The prosperity experienced in the United States the last half of the 20th century would not have been possible without the emergence of new consumer and production markets. The force of history is against aggressive trade barriers. Does the current recession present a new set of challenges to national economies that warrant trade restrictions? Perhaps. However, I am convinced in all we do—as nations, as an association, as individual operations management and supply chain professionals—that we need to take a more global perspective. As I said on Monday to conference participants: “Your challenge is to hone our Global Ability by engaging across borders, over time, beyond roles, and throughout your careers.” As nations the challenge will be to stimulate domestic production and output while operating in a global economy.

Abe Eshkenazi, CSCP, CPA, CAE
APICS CEO

    Earlier this week, Canada’s Globe and Mail featured an interview with Katherine Phillips, a Northwestern University professor. The article was titled “Scoring through Diversity,” and I thought it was particularly relevant as we approach the 2009 APICS International Conference & Expo, which highlights the theme “Global Ability.” Plus, the National Hockey League kicked off its season last night.

    Phillips examined NHL data about the nationality of players. Hockey fans know that Canadians dominate the league; however, Europeans are now joining in greater numbers. Phillips studied the performance of teams over time and how team diversity influences the ability to win games. Essentially, what she found is that, as individual team diversity became more prominent, teams won more games.

    “If you look at the composition of that starting line, if there is at least one non-Canadian on it, the team is more likely to have a positive uptake for the diversity increases that they have,” Phillips says. “They win more. There is an integration of those people who are ‘different’ into a legitimate status position on the team and there is a change. I think there is sort of a shift that happens.”

    Chances are, nobody reading this is an NHL player. However, we all work as part of teams. Phillip’s study underscores the importance of diversity within those teams. “If you believe that there is a possibility to improve on anything in life, how do you do that? You do that by taking different perspectives, bringing them together, and finding something new,” she says. “That is what learning is: It is taking two things that are out there and reconciling them, bringing them together in some way where you create something new.”

Diverse perspectives

APICS blogs are a great way to learn from new perspectives. Here, students and young professionals write about their ideas related to operations and supply chain management. Four up-and-comers are featured blog authors, and I encourage you to read what they have to say on everything from finding a job to sustainability. They will also be blogging about their experiences at APICS 2009.

    Our bloggers include Patrick F. Cullinan, who is studying global supply chain management at Clarkson University. Next is Rebecca Evangelista, a 2008 graduate of Syracuse University. Evangelista works in materials management within her organization’s supply chain management group. Sundeep Mathur is a supply chain manager for a biotech company in the Boston area. He, too, is a 2008 graduate of Syracuse University. Lastly, the blog features Christine Tsao, a project management assistant in California. Tsao graduated from California State University, Chico, where she earned her operations management degree.

    I am delighted APICS has a forum for these impressive young people as they explore the world of operations and supply chain management. More importantly, I am encouraged by what this kind of medium can provide to our members as a whole. Seeing the field through the eyes of a new professional can influence and encourage even the most experienced industry veteran. As Phillip’s NHL research suggests, different perspectives help us do our jobs better. Blogs are just one way APICS is your resource for numerous viewpoints. After all, we don’t want simply to play at the game of operations and supply chain management; we want to win.

Abe Eshkenazi, CSCP, CPA, CAE
APICS CEO

    Monday, President Obama invoked the power of innovation to spur U.S. jobs and support an economy that is stronger and more resilient than before the recession. “We know that in the global economy—where there’s no room for error and there’s certainly no room for wasted potential—America needs you to succeed.”

    President Obama delivered his speech at Hudson Valley Community College, in Troy, New York. He unveiled his administration’s strategy for promoting new jobs, new businesses, and new industries—and the plan relies on tapping “innovative potential” in areas such as the Internet, basic research, entrepreneurship, and health care.

    “We know that the nations that out-educate us today will out-compete us tomorrow. The ability of new industries to thrive depends on workers with the knowledge and the know-how to contribute to their fields,” he said.

    Part of President Obama’s plan focuses on education. He aims for the United States to have the highest proportion of college graduates in the world, and he sees community colleges as playing a major role. The initiative proposes enabling community colleges to help an additional 5 million Americans earn degrees and certificates in the next decade.

Working potential

Obama’s message resonated with me because it is consistent with the APICS mission to build knowledge and skills in operations management professionals to enhance and validate abilities and accelerate careers. APICS helps its members and their organizations to successfully compete and build a stronger global economy.

    Education is at the core of what we do. The APICS body of knowledge is comprehensive and supports not only operations management and supply chain professionals working in a manufacturing environment, but also those in other work settings. APICS education and certifications help ensure individual career viability, agility, and corporate success.

    APICS education is delivered to operations and supply chain professionals through an extensive distribution channel that includes higher education institutions such as community colleges, chapters, and international partners. In North America, 239 chapters conduct APICS training. Internationally, APICS works with 59 associates and authorized education providers to deliver education. APICS instructors, working through these partners, bring to their students extensive on-the-job experience as either practitioners or consultants. Partners and their instructors act as enablers of APICS education. However, they also facilitate interaction between students, and the sharing of their experiences maximizes the “innovation potential” of APICS education.

    The call to action is clear, not just for Americans, but for operations and supply chain professionals across the world. To compete in the global economy, you must be engaged in active learning throughout your career. No matter what channel you use for your APICS education and certification, the end result remains—you are better equipped to contribute to your field and tap your innovative potential. President Obama is right when he urges workers to “shape a brighter future.”