CPSM Blog

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.

The link between corporate plans,business plans and profit goals

Here is a section that the "leader" in you should enjoy. It explains how corporate goals need to mesh with business plans and operational tactics. These days budget cuts are being announced all around. While lay-offs form part of the action organizations are taking (the purview of HR) - Supply Management is being asked to help with reaching the targeted budget cut rate. The organizational budget cut is the corporate goal while a less expensive outsourcing contract is an example of an operational goal. Thinking through some of these things in your own organization and asking questions like:

• What are some of our company's goals?
• What is supply management doing to help achieve these goals?
• Can we measure supply managements' contribution qualitatively and quantitatively?

will help you understand the key message of this section.

You "represent" the supply profession in your organization

The important point to understand in this section (3-A-1 also in the Bridge Exam) is that as a supply management professional you represent the profession in your organization. The more you are able to create,project and expand the role of supply management- the more will be the respect for the profession in your organization.

A first step towards this is to have a Supply Management Department mission that is closely aligned to the mission of the organization. A good example is from South West Airlines.

This section also explores the need for supply managers to lead by being pro-active. The pro-activeness involves being alert to the needs and requirements of both your "internal" customers and also being aware of trends with "external" customers of your organization. Simply waiting for requirements is not enough - you need to reach out to internal users. If you do, you will be well regarded and will avoid situations where users by-pass supply management and simply buy on their own. The latter is called "backdoor buying".

Leadership in Supply Management

Once I starting going through the posts in this blog - I realized that I actually had the most detailed content for Exam 1 (Foundations of Supply Management) where I had written on each sub-content area. So you'll see 1A-1 and so on. For the content of Exam 2 I have broad coverage of each content area like (2A-) but not the sub content area. That's when I guess I was running short of time! Finally, there are no postings on Exam 3 content.

It's kind of an interesting coincidence that I figured this out on President's day which sets a kind of nice tone to the whole question of leadership.

Given our rather difficult times this content is particularly important for all supply managers - whether or not they are taking the CPSM exam. This portion covers three broad sections Leadership ( From 3-A-1 to 3-A-18), Risk and Compliance (from 3-B-1 to 3-B-8) and Strategic Sourcing (3-C-1 to 3-C-6).

Naturally, these are topics you'll see that the CPO is interested in because the CEO and Board are interested as well. You'll also see lots of seminars/workshops on these topics in the programming of your local ISM affiliate or the national ISM events. Let's get a sense of what the content is of these topics and hope you will be able to connect the concept to your own organization and thereby get your arms around each concept. Once you do this, the exam questions will be fairly easy to deal with....