CPSM Blog

Supervise and lead team to achieve initiatives

This section is easy if you have taken a "Principles of Management" class at some point. Just refresh some old but key concepts like chain of command and span of control. The span of control is the number of direct reports. This number cannot be very large unless everyone being supervised is a self-starter. The lesser the span of control more layers in the organization and generally slower. You guessed it- in a flatter organizations the span has to be more. It's less about control and more about encouragement and direction.

This gives me a nice segway to motivational theories - there are a whole bunch of them but stay with at least the ones in the text. Try to understand how they work in a supply department and in context of supply management tasks.

Leadership and change management are important topics covered in this section. Try to link your experiences here to the material.

This section needs more thinking and linking with your experience  because the content out there is enormous. There are entire classes in MBA programs on each paragraph - if you have done an MBA and are able to revisit the material do so. Otherwise just stay with a broad understanding and an application approach.

Hire,develop retain train supply management - the HR interface

As a supply management leader this section asks you to look at the supply management people from a HR point of view for the entire life cycle of the employee. Start at recruiting and here the right recruit can really do the trick. If you can find a good fit with the person and your teams' aims and the organizational priorities - you have a winning situation. But then the world is changing so rapidly that everyone needs training to deal with globalization, green issues, technology,recession to just name a few. So how do you decide training needs for each person? Keeping in view the training budget and employee/organization needs.Do you have the right mechanisms to share and implement what the colleague brings back from training? Do you consider in-house training so that the team moves together and develops a similar world view?

Developing a climate for energizing and keeping effective people is the retaining piece. Loosing your best people can be disastrous even when you can find a good replacement. The replacement might take months to understand the informal organization, for example.

Finally, the rather difficult and work of disciplining and dismissal of employees who do not come around after training,feedback etc. This should be rare and infrequent as disciplining one employee that is perceived as unfair- can really bring everyone down. Also following legal processes is important to avoid litigation in the future.

In short this section wants you to wear the HR hat as a supply manager.

What is the best supply management organizational structure?

This section is a fascinating topic close to my interests in supply management organizational structures. Should you have centralized or decentralized purchasing ? and this brought me back to some earlier research I had done on P-Cards which is a decentralized approach for low-value items. Many things go into deciding how do you organize the supply management function. Some of these considerations (like Geography) has become sort of less important with the Internet and cheap telephones.However the category of goods like leverage items (like raw materials with high volume and several suppliers) need you to have a centralized approach. This way you are able to prepare bid documents and negotiate better. On the other hand bottleneck items might do better if you had a centralized contract and just allowed P-Card purchases even by direct users.

Some of the more interesting points in this section is the possibility of organizing around product/brand. GE does that so that each business is responsible for direct materials needed for the product/brand. And this opens up the question of reporting that is functional,project or matrix.

A good way to prepare for this section is to recall the kind of supply management structures you have experienced and then try to recall the different types structures other supply management colleagues have. Next try to think through (carefully !) the strategy reason/s for having a particular structure or changing that structure.

Assessment of policies,procedures and Peter Senge's learning organization

It (Section 3-A-9) has three components first is assessment and situational analysis, second is the compliance metrics on supply management policies and procedures and the third subtopic is applying Peter Senge's learning organization ideas to the supply management organization. In this section, you are generally asking what is the articulated policy of the supply management department. Examples could be that a requisition from an user must be acknowledged within 24 hours and you may need to let the user department know the estimated delivery within 7 days. The compliance metrics part of this section is about confirming that compliance checks on procedures and policies are in place. For example, the supply management department in the above example might report that in the last quarter they did provide an action report to the requisitioning user at 24 hour acknowledgment 90% of the time. However, the 7 day delivery plan rule could happen in 70% of the cases as these were repeat buys and did not require RFP's etc.

The third sub-section is about the application of Peter Senge's learning organization ideas to supply management. Here is a nice summary of Peter Senge's ideas. Think about how they apply to the supply management function in your organization. Take systems thinking- think if the supply management thinking in your organization considers your organization as a system. For example, there may be an initiative for "going green" advocated by your CEO. This means that every contract that comes up for renewal should at least consider the possibility of more environmentally freindly products.

Section 3-A-9 is not a bridge exam topic or it seems to be a topic from the general CPM syllabus. In other words Bridge Exam takers don't need to cover this topic.

Participate/Lead cross functional teams like project,new product,international teams

This section calls on the supply manager to get involved ion cross-functional teams. Traditional supply/procurement folks tended to specialize ( I am "only indirect", handle" metals "are typical things you hear). While specialization is good the CPSM tries to encourage the supply manager to take on a more cross disciplinary role. For example, you may be already participating in a lean or six sigma initiative with colleagues in other departments like production planning and sales. Think about the team issues that come up like consensus building,time constraints and conflicts with your main role. Also the question of reporting to the team leader and your boss. Naturally, this sections wants you to take the lead in cross functional teams with a subject that you can influence positively. A good example are new product teams that can benefit from early supplier involvement. Who knows supplier capabilities in the organization ? You - the supply manager does  and leading such a team is likely to show great results.

Representing the Supply Management Profession- Externally

Continuing on the leadership theme, this section ( Task 3-A-7) urges the supply manager to take a leadership role in communicating and demonstrating what supply management can do. In one survey over 50% of managers felt that supply managers were only good for minimizing cost i.e. squeezing down the supplier on price. However, the entire purpose of the CPSM certification is to elevate the profession. So you have to be more visionary in your approach to the profession. If the CEO and the Board is interested in getting somewhere and supply management can help,even indirectly,its important to articulate that contribution and step up and make that contribution. In addition, this enhanced role of the profession should be communicated whenever opportunities arise in non-supply settings like industry meetings. Thus if you are in pharmaceuticals and have an opportunity to speak at a pharmaceutical industry conference, you should highlight the strategic role of supply management beyond mere price negotiation for your industry.

This changed mind-set is particularly important for the CPM Bridge exam takers who have two bridge exam topics in  this section.These are the issues of Confidentiality ( Task 3-A-7- part 5) and Legal Restrictions ( Part 6 in the section). Once again the focus is on elevating the perspective of the supply professional from tactical to strategic. You keep your company's plans confidential because you understand that suppliers may talk among each other and inadvertently your organizations' strategic intent might be communicated to competitors.Similarly, you need to be aware of anti trust laws and avoid revealing prices obtained from a smaller supplier to a dominant supplier. By doing so, you could strengthen the dominance of the supplier, who could possibly cut price drastically and maintain monopoly control of the market.

On the legal restrictions part , the topic includes knowledge of US export restrictions particularly
US Export Licensing. It may seem confusing why export laws are included in the syllabus here- seems like outbound logistics and therefore the purview of marketing and distribution people. My guess is that - supply managers are anyway responsible for imports (incoming goods in the supply chain) and therefore become the "go to" people for export laws within the organization.

Corporate Acquisitions, Mergers,Divestitures and Supply Management

This is another topic from the Exam 3 that takes the supply managers role to the next level in acquisitions,mergers and divestitures.

Supply managers have a role in advising the top management team about the supply aspects of planned acquisitions,mergers and divestitures. You tend to know from suppliers in your industry about others they supply to and the strength or otherwise of the supply chain of a potential acquisition target. Here confidentiality is important and the important thing is to step up in your organization with inputs that might help, Similarly there are enormous challenges with mergers and trying to merge supply chains and supply managers between two organizations. Here is an interview regarding the Pfizer Wyeth merger.

Think of all the supply management integration that is required in such a mammoth merger !

How much time should I spend studying Task 3-A-8 ?

"Careful in spending" is the hallmark of the professional supply manager! Yet I find that CPSM candidates seem to get mixed up in "spending"  time for their study efforts.

I believe you should spend time in proportion to the number of questions that will come up from a particular section.So if you look at 3-A-8 which is about "cross-functional teams" for process improvement,international etc. you should give a lot of time to this section.

Why? because as the Study Guide 3 tells you (see page xii) this section has 8 questions compared to only 3 questions in  say Topic 3-B-2. In other words, you should be spending double (if not triple)  the time with 3-A-8 than with 3-B-2.

While taking the exam though you should have an "equal time" principle to every question - you should not be spending extra time on any question. Pace yourself during the test.

Controls and Business Continuity

Once you have a formal plan - this section is about keeping that plan on track. Controls can be before the fact, during or after the fact. For Example:

• Before the fact  you might have a target of reducing inventory of raw material by 20% through better co-ordination with production planning and the sales forecast in one year.
• During the fact (CPM Bridge Exam takers - note that "during the fact" is  what you need to know),  to keep this plan on track you might want to keep track two types of metrics, one inside the organization like variations in sales forecast and outside as to how the supplier delivery contract and transportation changes are being implemented. Maybe, the supplier is working on a nearer warehouse to cut delivery time and you are keeping track of progress on this metric on a fortnightly basis.
• After the fact when budgets and performance is being reviewed at the annual review meeting you are looking good if you have met or exceeded the 20% reduction of inventory target.

The other recent (also bridge exam) topic is about business continuity. Supply management plans must have continuity provisions. Have you addressed what happens if there is a power outage in a business process suppliers' organization? Do they have a generator? Or a second facility at a different place. Typically, supply managers need to have more than one supplier for both bottleneck and critical items like technology no matter how good the primary supplier is.

Strategic Supply Management for market conditions,business needs and available resources

This one is also an entire bridge exam topic that CPM's must take for the CPSM and is an example of how the CPSM pushes the "Board" (read "C" suite) for supply management. For example,instead of just "gloom and doom" in the current recession it charges supply managers to think about reviewing the strategic situation with respect to their function. Thus, if working capital is suddenly short and banks are not lending then is your plan agile enough? Are you able to put every buyer on trying to re-negotiate contracts for both quantities and payment terms making sure that suppliers don't collapse and supplies don't suffer. In other words:

• is your plan flexible?
• is it execution oriented?
• and is the plan being monitored ? -to deal with whatever is happening in the market, in your business within whatever resources you have

Elements of the operating plan include forecasts,budgets,staffing and metrics measuring how well you are doing. Examples of cost effectiveness metrics include cost changes and cost avoidance. If for instance you can line up your supplier to supply only when you have an order you have avoided both the inventory holding cost and the uncertainty of an order that will actually use the inventory.