Procurement and supply managers reap the benefits of a strong employment economy, but professional pressures mount in a tough sourcing environment
It continues to be an employee’s market, and those in the supply chain profession are reaping the benefits of the trend in 2018. The economy remains on its upward trajectory worldwide, and U.S. unemployment levels were at historic lows heading into the summer months, as wages continued to increase across the board. For buyers and supply managers, the story is even better.
In early June, the Institute for Supply Management released its Annual Salary Survey, revealing higher than average salaries and wage increases for supply management professionals—those responsible for buying and managing a wide range of products and services for companies of all sizes—as compared to the larger professional workforce. On average, supply management salaries rose more than four percent last year, versus three percent for professionals generally, according to ISM, which represents 50,000 supply management professionals who manage about $1 trillion in corporate supply chain procurement annually. What’s more, buyers and supply managers’ average overall compensation was close to $120,000 last year, the ISM survey showed.
So what does this mean, aside from the liklihood that buyers are bringing home a bigger paycheck these days? ISM points to the value the profession brings to the table and companies’ understanding of and willingness to pay for that value, especially in today’s climate.
“In today’s global economy, excellence in supply management improves both top- and bottom-line performance, and advances companies’ leadership on the worldwide stage,” Paul Lee, director of ISM Research & Publications said in a statement announcing the results this spring. “Supply management professionals’ higher-than-average wage growth reflects the significant value they add every day.”
Such value plays an increasingly important role in the electronic components supply channel, as companies and their purchasing departments face a tougher sourcing climate in 2018. Longer lead times and the threat of shortages are putting pressure on buyers to expand their sourcing networks while also managing the supply chain risks such practices often entail, including slower production lines due to delays and the danger of sourcing counterfeit parts. In short, supply chain risk is rising right alongside employment levels and wages. Another recent industry study shows that procurement leaders are prioritizing risk management as one of their most strategic responsibilities in 2018, based on a host of factors affecting global supply chains. The study, Managing Supply Risk: Are You Prepared for a Black Swan Event? by consulting firm A.T. Kearney and research/analytics firm RapidRatings, also showed that most companies expect their procurement organizations to be given more responsibility for managing risk over the next two years.
Such challenges are here to stay, and will be exacerbated by other market factors. Employment growth is expected to continue, even as some industries find it challenging to fill both skilled and unskilled jobs. This remains a thorn in the side of many manufacturing and industrial firms, which is another factor threatening productivity. Although manufacturing employment levels saw 20 straight months of growth as of May 2018, procurement professionals at manufacturing firms said the labor market remains a constraint to their production and that of their suppliers, according to separate ISM data also released in early June.
The bottom line? Buyers and supply managers can count on both a rewarding and challenging work environment ahead.