Supply Chain Attracting—and Rewarding—MBAs
By Michele Barnett Berg and Corey Billington -- Supply Chain Management Review, 5/1/2008
Mention that you’re completing an MBA program and until recently, your listeners would probably have assumed you were going into consulting or headed for a job on Wall Street.
Today they could be wrong. Although the latest studies show that banking, other financial sectors, and consultancy still exert the greatest pull on newly minted business-administration graduates, a substantial contingent are heading toward industrial roles.1 In particular, strong empirical evidence suggests that more and more MBAs are being lured to jobs in supply chain and procurement functions—jobs that are all over the world.
The trend is quite evident here at IMD, the global business school in Lausanne, Switzerland. “In 2007, the interest level in procurement and supply chain jobs tripled from four years earlier, and the number of jobs taken in these functions has continuously increased,” observed Katty Ooms Suter, director of IMD’s MBA admissions and career services. “The interest level can perhaps be attributed to a better understanding that these jobs offer plenty of career growth and can lead to executive-level roles.”
In the past, most business schools focused their curricula on strategy, finance and marketing with little emphasis on operations activities, including procurement and supply chain. The MBA programs that have focused on procurement, logistics, and supply chain have seen a steady increase in popularity. As a result, those schools have been challenged to expand their faculty rosters fast enough, and have looked—with some success—at recruiting new faculty from industry. Co-author Corey Billington is a case in point: he joined IMD in 2005 as professor of procurement and operations management after serving as vice president of supply chain services at Hewlett-Packard, where he managed procurement and central engineering. Similarly, Joseph Sandor, formerly the top procurement and logistics officer at Sara Lee, joined Michigan State in 2006 as a supply management professor at the university’s Eli Broad College of Business.
Statistics on MBAs’ placements in supply chain and procurement jobs are impressive, with the majority of these schools indicating that their graduates have multiple offers with competitive salaries. MBAs taking these types of jobs can expect to earn salaries equivalent to (and in a few cases higher than) those of their counterparts in other functions. Exhibit 1 shows the numbers from two schools we studied with well regarded programs, Arizona State University and Michigan State University.
At the same time, graduates entering the supply chain arena can often benefit from faster career advances, with less competition. This is highly attractive to ambitious MBA graduates, and is quite likely to be a different experience from that of their peers in fields such as management consulting, investment banking or marketing where an MBA degree is common. There are also tantalizing glimpses of new paths to the CEO’s office— paths traditionally coming out of marketing, finance or sales functions. Richard Wagoner, chief executive of General Motors, is just one example of a head of purchasing who made it to the top office.2
Executive search consultants are alert to the MBAs’ moves toward operations jobs; indeed, they are prime movers behind the trend. “Jobs in the supply chain and procurement functions are gaining momentum and better visibility, although the function is nowhere near its tipping point,” says Heidi Hoffman, co-global leader of the supply chain practice at Russell Reynolds Associates. “MBAs have a huge opportunity to be part of an area that has become a critical piece of the organization, where costs can be 60 to 70 percent of overall product cost.” Other recruiters point to the allure of supply chain work itself. “With all the changes in the function, it remains full of new and interesting challenges, unlike sales, where the function has remained much the same,” says William Fello, a senior client partner who leads Korn/Ferry’s supply chain practice.
Hoffman of the Russell Reynolds’ company sees the need for more broad-based thinkers in the supply chain field. “The job has become a strategic liaison. The person must be the diplomatic negotiator who can source and secure goods and materials. Even MBAs coming from different industries and functions have an opportunity to enter the field since the skills needed are cross-functional and transferable.”
Practitioners share her opinion. Luc Volatier, former chief procurement officer of food products company Numico, views MBAs as invaluable for helping organizations deal with the new complexities in global supply chains. “The tasks are no longer about squeezing costs; they’re about delivering to the bottom line and bringing innovation to the organization,” he says. Adds Malcolm Harrison, Nestlé’s head of purchasing: “Understanding how to manage internally and externally and handling the diplomacy on both sides is the key to success in this function. This skill must be accompanied by a highly analytical mind and by being inquisitive—asking the “what ifs” and thinking through the scenarios,” says Harrison.
When Volatier is looking for new hires, MBAs are highly attractive, but they must meet his top four criteria. They have to have impeccable integrity—everything above board all the time, with full disclosure and transparency. They have to be smart, with proven analytical thinking to handle the complexities of the position. He wants people who are passionate—whose passion can “make great things happen,” as Volatier puts it, and who will inspire others. And his picks must be outstanding communicators, able to build relationships, be highly diplomatic and handle negotiations astutely.
What MBAs are Saying
We spoke to a variety of MBAs from top programs who are working in the supply chains of leading companies. Here’s what they had to say:
- Philippe Salavert, Nokia (IMD 2005): “There are only a handful of MBAs in our 800-person organization. That should change as our business continues to grow in complexity and requires a higher level of critical thinking and direct interaction with suppliers. An MBA provides a lot of training in the soft skills. Nokia has been ranked first in class for sourcing, and as expectations have increased, the focus on staying a market leader has intensified. Often the people who worked in these functions in the past were not best-equipped to ensure a competitive future for the company, which has created an opportunity for MBAs looking for challenging positions.”
- Hari Raghavachari, Johnson & Johnson Consumer (IMD 2005): “Over the last four years we have hired 12 MBAs, which represents a little over a third of the supply chain and operations group. An MBA strengthened and broadened my cross-functional abilities, which has proved absolutely crucial to working at J&J. Our group has grown increasingly important and is a key driver of competitive advantage. The focus is no longer about cost but about supplier-driven innovation. If MBAs are looking to make strategic impact, this is a great place to come. Where else in the organization can you contribute to the bottom line and to top-line innovation?”
- Jennifer Petibon, large beverage company (Arizona State University 2005): Having an MBA, especially one from a program like the W.P. Carey School at Arizona State, gave me increased credibility, which led to higher-priority projects. A third of our 50-person organization has an MBA and this fraction is growing as we actively recruit every year from the W.P. Carey program. MBA skills are desired because there is an emphasis on being strategic. Although the tactical piece of procurement still exists, there is a greater emphasis on understanding strategy, trends, and market implications.”
- Hakan Sizanli, Danone (Insead 2005): “Although historically Danone has not recruited MBAs for its procurement and supply chain group, this has begun to change. Having an MBA gave me increased credibility and access to high-profile projects. Danone has many strategic initiatives and market-driven projects that present great opportunities for MBAs to participate in and lead.”
- Johnson Wu, Cisco (MIT 2006): “In the technology industry, an MBA is a plus but it must follow a certain level of technical acumen. MBAs have the business savvy needed when managing the interface between suppliers and manufacturers; these strategic relationships have grown in sophistication and their impact on the top line of the business is dramatic. My MBA internships gave me experience I would otherwise never have had access to. I did an internship in Dell’s contract manufacturing organization and then another at a factory in China.
What a difference a decade makes. The profession has been transformed from the days when it was seen by most business leaders as having minimal business impact to today, when its potential for value creation and competitive advantage are quite obvious. Supply chain and procurement professionals who once were viewed as analytical introverts are now seen to be value creators and agents of competitive advantage.
As the impact of globalization continues to affect procurement and supply chain organizations and as business issues become more and more complex, we see a need for higher levels of skills in communication, analytical thinking, collaboration, and cross-functional interaction. It’s exactly the kind of world that MBAs are trained for.
Author Information: Michèle Berg is a research associate at IMD. Corey Billington is professor of procurement and operations management at IMD.
- Financial Times 2008 ranking of full-time MBA programs
- G. Richard Wagoner, Jr. biography, GM Web site.
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