What on Earth does “supply chain management” mean?
The term was coined by Keith Oliver, a consultant with management consultants Booz Allen Hamilton, in 1982, said Jerome Ferber, learning transformation lead at the Supply Chain Management Association of Canada (SCMA).
Before the collective term came into being, there were only practitioners for its separate parts: procurement, logistics, inventory control and warehousing.
Ferber says that today the roles of most supply chain managers have expanded to include all of the various elements of supply chain management (SCM).
“Supply chain management covers the flow of goods, services, finance and information within and among organizations, from raw materials to end users, in the most efficient and effective manner possible,” said Ferber.
“It is how organizations provide goods and services to their customers. The goal is to maximize value, manage risk and support organizational goals through integration and optimization of the supply chain.”
Compared to many other Canadian professional associations, the roots of the SCMA extend deep into Canadian industries.
The organization was founded in 1919 as The National Association of Purchasing Agents (NAPA). Since then, the association has periodically changed its name and the composition of its membership.
In 1921, several NAPA chapters combined to form the Council of Canadian Purchasing Agents Association (CAPA).
In 1969, CAPA changed its name to the Purchasing Management Association of Canada (PMAC), to reflect the purchasing function’s increased professionalization.
And in 2013, PMAC and Canadian Association of Supply Chain and Logistics became one, as the Supply Chain Management Association.
“The association has 7,000 members across the country,” said Ferber.
All SCMs are not identical. Some are in-house employees, while others are hired contractors.
“At the management level, they are usually in-house permanent employees,” said Ferber.
“However, the remainder of the staff is a different story and it varies. It is largely dependent on the organization. Larger, more established firms have a stable department of supply chain individuals.”
Other, smaller firms, or others that staff-up for projects as they are awarded, will use contract engineering, procurement and construction management (EPCM) firms.
“Right now, in Alberta, the number of contractors in supply chain is increasing as more firms are utilizing contractors due to the ease of hiring and letting them go,” said Ferber.
SCMs in the construction industry are facing a number of challenges now, Ferber says.
“There are sourcing challenges, as supply is limited and there is competition within the industry for those supplies,” he said.
“In addition, there is competition from other industries, either domestic or international, that would like those materials, too.”
Other challenges facing construction SCMs are a shortage of transportation services from outside the local area, and inadequate or interrupted supply of raw materials.
“For example, there is only so much lime to make concrete and it can be produced only so fast,” said Ferber.
“So you are facing not only competition for the concrete as a raw material but competition for the raw material that makes concrete.”
SCMs sometimes need some assistance from an outside expert to do their jobs effectively.
Larry Berglund, with Presentations Plus Training and Consulting Inc. in Surrey, BC, says construction projects are different from other large projects because they have established procedures and legal contracts for most of the processes involved in delivering a project to its owner.
“Construction projects are massive, multi-million dollar affairs with many different types of risk that need to be covered,” said Berglund.
“Project management is constrained by all the documents and regulations that outline standard practices. Every province follows similar standards, but there are individual wrinkles.”
SCMs in B.C. have some stiff headwinds to contend with, says Berglund: A shortage of skilled labor, increasing cost of construction materials and a shortage of some kinds of steel.
Cris Munro, the principal of CM2 Ventures Inc. in Langley, B.C., says there is much the people who fill the supply chain function in construction need to learn how to do better.
“Too many of them don’t think strategically,” said Munro.
“They tend to focus on just one aspect of the process, instead of the process in its entirety, and then choreographing it.”
Managers need to be strategic, and think of where they want the company to go.
“Supply chain management involves looking at the whole flow of goods and services in a construction project and bringing everything together,” Munro said.