The CPSM: The Key To Effective Supply Management

“The CPSM (Certified Professional in Supply Management) – The Key to Effective Supply Management” James D. Reeds C.P.M., CPSM, CFPIM, CIRM, CPCM President, Learning Solutions International and Past President, ISM Silicon Valley, Inc. Introduction: It has been said, quot;Language is the dress of thought.quot;1 This is especially true today, as the tumult of global business requires that Supply Management professionals constantly expand and upgrade their competencies and skills. The very term, Supply Management is a reflection of this simultaneous dilemma and challenge. It is a dilemma because it is a relatively new term or conceptual framework that requires serious rethinking of what the concepts of purchasing, procurement, strategic sourcing, contract management, supply chain management, logistics, and other related terms mean. It is a challenge, too, for both business enterprises and individuals professionals in these fields to grasp a way forward in the contexts of personal growth and development and what business needs in its Supply management talent pool to remain competitive and profitable. This article will suggest that the concept of Supply Management, as offered by the Institute for Supply Management (ISM) most accurately meets the growth and development needs of professionals responsible for these historically varied yet related disciplines. Likewise, a more precise understanding by business enterprises of Supply Management and its Body of Knowledge is no less a high priority. Further, ISM’s new professional credential, the Certified Professional Supply Manager (CPSM), offers a serious framework for a more thorough understanding of Supply Management. A Definition of Supply Management: The Institute for Supply Management (ISM) defines Supply Management1 as: The identification, acquisition, access, positioning, management of resources and related capabilities the organization needs or potentially needs in the attainment of its strategic objectives. During the development of its new professional credential, The CPSM – [Certified Professional in Supply Management], ISM added the following fourteen components to the definition2: Supply Management Components.4 1

Disposition/Investment Recovery Distribution Inventory Control Logistics Manufacturing Supervision Materials Management Packaging Product/Service Development Purchasing/Procurement Quality Receiving Strategic Sourcing Transportation/Traffic/Shipping Warehousing The addition of these fourteen components effectively helped to set the ‘boundaries’ of the Supply Management Body of Knowledge (BOK) framework. This clarification has identified the functional areas and processes of a business necessary to effectively manage its supply chains, supply networks and value chains. Why Supply Management? In a March 10, 2008 article in the Wall Street Journal, “Beyond Buying,” Supply Management thought leaders Larry C. Giunipero, Robert B. Handfield, and Douglas L. Johansen offered a rationale for the imperative of a Supply Management framework5: Traditionally, these managers have been little more than purchasing officers. They dealt with a relatively small group of familiar suppliers, and had few overall goals beyond squeezing out as many price cuts as possible. Now, as companies globalize and outsourcing spreads, supply-chain managers must make decisions involving networks of partners in far-flung corners of the world. Meanwhile, a fierce competitive marketplace is driving companies to collaborate with suppliers to help them develop products more quickly and reduce waste in the supply chain. Technology is also pushing suppliers and clients closer, making it easier to keep tabs on orders and share information. Specifically, supply-chain managers must be able to handle increasingly complex and critical technology. They must know how to source jobs globally, and be familiar with the ins and outs of various markets. They must have strong management skills, to handle everything from building relationships with suppliers to creating in-house teams to solve problems. And they must be trained in making crucial strategic decisions, such as when to turn to suppliers for help in lowering the total cost of a product. A survey conducted as a part of the Wall Street Journal article highlighted the expanded skills needed to effectively manage today’s supply chains6: 2

The percentage of surveyed supply-chain managers saying the following skills or approaches are required by the rapid transformation of their field MANAGING TECHNOLOGY Electronic procurement/reverse auctions 39% Integrated systems and collaboration 38% Internal systems integration 36% BUILDING TEAMS 85% Strategic relationship management Cross-functional/virtual teams 43% Customer relationship building (internal/external) 33% FINDING SUPPLIERS GLOBALLY Outsourcing Services 40% 23% Global Sourcing Strategies Training approaches for global environment 21% BIG PICTURE VIEW Strategic cost reduction 63% Greater focus on total cost in supplier selection 46% Strategic vs. tactical orientation 42% Broader general business skills 35% Supply-chain business process focus 34% The Institute for Supply Management (ISM) - Certified in Supply Management Professional (CPSM): A Focus on Talent and Skills: In order to meet the daunting skills challenge, the Institute for Supply Management (ISM) began a methodical campaign to move away from the various, confining concepts inherent in the term, ‘purchasing’ (and similar traditional terminology) to a more precise reflection of the needs of business and professionals in the field. In 2003, this meant a change in the identity of ISM itself: from the National Association of Purchasing Management, to The Institute for Supply Management. Following this change, the design and delivery of an advanced professional credential was deemed necessary. The decision to implement a more rigorous professional credential, the Certified Professional in Supply Management (CPSM) was inaugurated, with the first pilot exams offered in the spring of 2008. Along with an expanded Body of Knowledge, The requirements for the CPSM were also advanced well beyond those of its earlier professional credential, the Certified Purchasing Manager (C.P.M.). The minimum criteria for the CPSM qualification are7 Three years full-time, professional supply management experience • (nonclerical, nonsupport). A Bachelors’ degree from a regionally accredited institution or • international equivalent. 3

Pass Three CPSM Exams: • o Exam 1. Foundation of Supply Management o Exam 2. Effective Supply Management Performance o Exam 3. Leadership in Supply Management OR if you are a C.P.M. in good standing, pass a single Bridge Exam8. • A Breakdown of the CPSM Body of Knowledge through each of it three examinations is a useful indicator of how the new competencies/skills required to lead Supply Management is instructive: Exam 1: Foundation of Supply Management Section Name # of Questions Cost & Finance 32 Contracting and 32 Negotiation 17 International 14 Social Responsibility 20 Sourcing Supplier Relationship 35 Mgmt. 150 Exam 2: Effective Supply Management Performance Section Name # of Questions Forecasting 19 19 Logistics 19 Materials and Inventory Mgmt. 26 Organization/Dept. Assessment 15 Planning 12 Project Mgmt. 19 Product Development 21 Quality 150 4

Exam 3: Leadership in Supply Management # of Section Name Questions Leadership 96 32 Risk and Compliance 37 Strategic Sourcing 165 A casual review of the CPSM examination Body of Knowledge (components are termed ‘Tasks’ by ISM) reveals a heavy emphasis on areas of leadership, strategy formulation and execution, and strategic sourcing, as well as ‘new’ knowledge areas such as Project Management and Risk Management and the host of competencies related to Logistics, Material and Capacity Management, Inventory Management and Advanced Planning. ISM’s CPSM credential is one sure way to help ensure that the concept of Supply Management gains a sure foothold in the formulation of business enterprise strategies as well as in the career development roadmaps of professionals in the field. To reinforce this thinking, ISM offers the definition of just what traits characterize a Supply Management Professional9: A supply management professional is an individual who provides leadership by aligning resources to define and satisfy diverse internal and external customer needs through the acquisition and ongoing management of materials and services. The Way Forward Either as a professional in the traditional fields of purchasing, procurement or other similar fields or as a business enterprise that seeks to remain competitive and grow in profitability, there must be a reframing of thought of what is required to embrace the concept of Supply Management. Such a new framework goes well beyond the traditional optimization of internal functions and processes within a firm. It especially means a new outward focus outward and into a firm’s supply chains, supply networks, and value chains. One sure approach for an individual to add value to their career development and growth is to attain the CPSM credential. Even if this goal may not be possible for all, at least seek an in-depth Understanding of the ISM CPSM Body of Knowledge. 5

For business enterprises, the best approach is to encourage the development of Supply Management competencies and skills among its supply Management professionals. The CPSM credential, and/or a demonstration of the competencies of the CPSM Body of Knowledge should be reflected in the personal mastery or KPI metrics of its Supply Management professionals. For Further Reading: The Supply Management Handbook. 7th edition. Joseph Cavinato, Anna E. Flynn and Ralph G. Kauffman, Eds. McGraw-Hill. New York, N.Y. 2006. ISBN 0- 07-144513-7. Foundation of Supply Management. Joseph R. Carter, and Thomas Y. Choi. ISM Professional Series. Institute for Supply Management (ISM). Tempe, Arizona. 2008. ISBN 978-0-9815770-2-9. Effective Supply Management Performance. Darin L. Matthews, and Linda L. Stanley. ISM Professional Series. Institute for Supply Management (ISM). Tempe, Arizona. 2008. ISBN 978-0-9815770-1-2. Leadership in Supply Management. Anna E. Flynn, Ph.D. ISM Professional Series. Institute for Supply Management (ISM). Tempe, Arizona. 2008. ISBN 978-0-9815770-0-5. Endnotes: 1 Samuel Johnson, The Lives of the Eminent English Poets: Cowley. Lives of the English Poets (1779-81). 2 Carter, Joseph R. and Thomas Y. Choi. Foundation of Supply Management. ISM Professional Series. Institute for Supply Management (ISM). Tempe, Arizona. 2008. P. vii. See also: Cavinato, Joseph L., “Supply Management: ISM’s Leadership View,” in The Supply th Management Handbook. 7 edition. Joseph Cavinato, Anna E. Flynn and Ralph G. Kauffman, Eds. McGraw-Hill. New York, N.Y. 2006. pp. 7-8. 3 CPSM Study Guide. Exam 1. Foundation of Supply Management. Robert B. Handfield, Ph.D. Editor. Institute for Supply Management (ISM). Tempe, Arizona. 2008. p. ix. 4 “ISM Supply Management Definition and Related Components”. ISM, Tempe Arizona. November 17, 2007. 5 Giunipero, Larry C., Robert B. Handfield, and Douglas L. Johansen, “Beyond Buying,” The Wall Street Journal. March 10, 2008. Dr. Giunipero is professor of marketing and supply-chain management at Florida State University's College of Business. Dr. Handfield is Bank of America university distinguished professor of supply-chain management at North Carolina State University's College of Management and director of the Supply Chain Resource Cooperative. Mr. Johansen is a doctoral student at Florida State University's College of Business. 6

http://online.wsj.com/article/SB120468020097412051.html 6 Ibid. 7 Certified Professional in Supply Management (CPSM) Program FAQs. http://www.ism.ws/certification/content.cfm?ItemNumber=5723&navItemNumber=5719 - FAQ1 8 The CPSM Bridge Exam is three-hour examination that spans the Body of Knowledge of the CPSM designed to help “Bridge” qualified Certified Purchasing Managers (C.P.M.s) to the CPSM credential who have maintained their eligibility through ISM (i.e. are in ‘good standing’). 9 CPSM Study Guide. Exam 1. Foundation of Supply Management. Robert B. Handfield, Ph.D. Editor. Institute for Supply Management (ISM). Tempe, Arizona. 2008. p. x. 7

The CPSM: The Key To Effective Supply Management

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The CPSM: The Key To Effective Supply Management — Document Transcript