CIPS News


Procurement and supply management practices and performance

CIPS 15 October 2015

An interview with Danny Samson, Professor of Management at the University of Melbourne 

Following an extensive survey of CIPS members, Professor Danny Samson shared with delegates at the recent CIPS Australasia conference, the findings of how the procurement and supply practices of a large sample of Australian organisations impacts on operating outcomes, sustainability and business performance. CIPS spoke to Danny following the conference.

What do you see as the big issues in Supply Chain Management today?

DS: Innovation in supply chains and connected areas such as procurement is bringing opportunities and threats like never before. We are seeing increasingly disruptive new business models brought into many industries, such as AirBnb, Uber, Amazon, mobile services. While this is not a brand new issue, we are seeing more mass customisation, pull supply replacing push, and start-ups threatening entrenched industry dominators in almost every supply chain. Dell computers was an early disruptor in the computer industry, followed by Amazon, which keeps on disrupting, and lean start-ups are almost becoming an industry in itself! Even my own industry, higher education, is seeing more new players attack our markets from every corner of the world than ever before. Digital capability has accelerated these disruptions and it is not going away.

Has globalisation changed supply chain management for better or worse?

DS: Globalisation has brought many benefits to most economies, but yes it does have a ‘dark side’ in my view, for our economies and supply chains. Globalisation has been good for consumers, who can now access goods and services of a much higher variety than ever before. Yet for procurement and supply chain managers, we see local supply chains being threatened by foreign goods that are much cheaper. An example is that we see fruit and vegetables imported into Australia from most corners of the globe, while local farmers are being shut out: the dark side of this is that some of those products are grown using pesticides that are banned in Australia, in ground that is contaminated, and processed using preservatives that we do not use here, for health reasons. Information does not properly flow through these supply chains along with the products, and consumers are being offered some products that may not be safe or of similar quality to those local products being replaced. Some Australians are losing income and their jobs: there needs to be much more transparency and light shed on these supply chain issues.

How much power do you think the consumer should have to influence the supply chain (for example with respect to ethical purchasing)?

DS:Consumers are increasingly voting with their feet on ethical matters. They care more than ever about safety and health, and choose to buy from suppliers whose value systems and ethics are seen to be acceptable. We are more discerning than ever about the sustainability impacts of supply chains. In some industries, such as chocolate, significant changes are in play about increasing the standards of ‘ethical sourcing’ while in others such as textiles, there is still a long way to go. An example of a current issue that will cause massive damage to a company for many years, is the way that VW has shot itself in the foot. Consumers like to feel good about the cars they buy, and most other consumer goods too, and VW is about to pay a very large price for what they have done. The converse is true also: Apple does so very well because of their positive, 'innovative and cool' image.

You teach the Master of Supply Chain Management at Melbourne Business School. How do graduates of this course add value to their organisation?

DS: Our graduates know how to design and run supply chains and procurement systems in order to deliver organisational goals effectively. This firstly means that they can connect their procurement and supply chain thinking with overall business strategies. Then they know how to formulate and implement supply chain management in terms of the ‘nuts and bolts’ of how to actually do supply chain improvement, lifecycle cost procurement, inventory and supply chain optimisation, and importantly, relationship and people management and leadership. Being a successful procurement or supply chain manager requires a combination of technical and business acumen with great ’soft skills’, which our graduates have in large measure.

Ends 

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