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MMG To Sponsor Several Workshops at ISM 2013 International Conference at Dallas/Ft. Worth

The world’s sluggish economic performance continued through 2012: about 2.3% GDP growth for the U.S.; -.6% for the EU; and 7.4% for China. The world increasingly produces most of its wealth through services. Since 1980 the manufacturing portion of U.S. GDP has declined from roughly 21 percent to about 12 percent. The world decline over the same period was roughly from 24 percent to 16 percent. The price of U.S. goods relative to services fell by 52% between 1970 and 2010. The 2011 logistics spend was an estimated 8.5% of U.S. GDP. But manufacturing and services have been combining.

The “Service Revolution” in manufacturing offers exciting opportunities in materials management. Deloitte Research concludes that the basis of manufacturing competition is shifting towards service excellence. Of the manufacturing companies Deloitte benchmarked, service revenues average more than 25% of the total business. For many of the companies such as Rolls-Royce and Xerox, service contributes 50 % or more of total revenues. They found that the average profitability of the service businesses benchmarked is more than 75 percent higher than overall business unit profitability, and accounts for an estimated 46 percent of total profits generated today; and that in many manufacturing companies there would be little or no profitability without the service business. Caterpillar has more than 600,000 spare parts; an installed base of equipment that often needs service for 40 years or longer; and is able to ship its customers what they need, within 24 hours, 99.7 percent of the time. Hyundai and Kia require a service and parts operation that functions at the highest level in order to support warranties of up to 10 years and 100,000 miles. They stock more than 890,000 parts for 137 vehicle types.

But Deloitte says that despite the great potential for growing profits through the service business, about 67% of manufacturers fail to do so: the median company benchmarked secures only 40 percent of the after-sales service market and 75 percent of the after-sales spare parts market in servicing its own installed base of products (the “captive market”). Only a few OEMs have made significant inroads in servicing “non-captive” customers—a market that is typically 2 to 10 times larger than the captive market. The study cites barriers to service excellence: supplier delivery performance, long purchasing lead times, inadequate information systems, inadequate supply chain visibility, inadequate planning capabilities, data problems such as master data inaccuracy, organizational and communication barriers, lack of attention/investment, inadequate multi-echelon inventory management capabilities and inadequate supplier relationships. These “barriers” amount to great opportunities for materials-management professionals.

Excellence in materials management is essential to a productive economy, both on the manufacturing and non-manufacturing fronts. Many of us have expanded our materials-management skills beyond manufacturing to include service, reverse logistics, repair, etc.: the complete Supply Chain. We must all keep our skills honed to meet today’s job requirements.

On May 7, 2012 ISM honored its Materials Management Group as 2011 Group or Forum of the Year. ISM annually recognizes Group and Forum excellence during its International Conference held each spring. It is the second time that the MMG has achieved this distinction. The first time was in 2010. ISM Groups and Forums Excellence Awards recognize those Groups and Forums that demonstrate excellence in their professional operations, educational offerings, recruitment, training and retention efforts, while at the same time communicating the value and prestige of ISM and the supply management profession.

The Materials Management Group of ISM has a mission to advance professional development in the field of purchasing and materials management. Materials management is practically synonymous with supply management, and includes the entire field of purchasing along with disciplines such as production or service planning, warehousing, traffic, and trucking. As part of fulfilling this mission, the MMG is sponsoring several workshops at the ISM International Conference in Grapevine (Dallas) April 28 – May 1, 2013. As usual, some of us will be helping to staff the Groups and Forums Booth. Drop by to say hello and talk some shop. Anyone involved with materials has a stake in materials management. By enrolling with the MMG, you give us an opportunity to know who you are, where you are, what services you might need, and to keep you informed of educational and networking opportunities that we might offer. Enrollment costs nothing and takes very little time. Simply visit www.ism.ws / Members Only / Affiliates, Groups & Forums / Group/Forum Enrollment Form [log in] / Find Materials Management under Groups. As an ISM member you can sign up for any groups or forums at no cost.

We would like to hear from ISM members, from any place in the world, that would like to help represent the MMG in their area or to participate in planning at the national or international level. If you have an interest in working with the MMG leadership team, please contact me or any of the other board members at the MMG website www.ismmmg.org. We look forward to hearing from you.

Deloitte Research—The Service Revolution in Global Manufacturing Industries http://www.apec.org.au/docs/2011-11_training/deloitte2006.pdf

Fred Lutz, C.P.M., CIRM
Demand Planner, Servigistics

Fred Lutz is a Demand Planner at Servigistics, which is the leading provider of service parts planning and optimization solutions, and also offers Planning as a Service: 585-419-3152, fred.lutz@servigistics.com He is a Past Chair of the MMG.

MMG Sponsored Workshops at
ISM 2013 Annual International Conference
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The Materials Management Group is proud to have been recognized by ISM for the 2008,2009,2010 and 2011 Group & Forum Excellence Award.