Defining Industries for the Global Supply Chain Economy

The Supply Chain Economy

Two Harvard Business Review contributors have pointed out that there is not yet a well-accepted definition of what industries fit into the supply chain economy.

Along the same lines, there also is not a formal count of the number of jobs supply chain encompasses or a rating of those jobs, nor is there an official assessment about how supply chain influences innovation.

To fill these gaps, the article authors, Mercedes Delgado and Karen Mills, are suggesting their own novel categorization of the supply chain economy.

What Delgado and Mills point out won’t be a surprise to you - that supply chain jobs are traditionally considered to be ones related to manufacturing, but this is just a small piece of the pie.

About 80 percent of supply chain jobs are related to a service, instead of fabricating a physical product. This includes roles such as operations managers, computer programmers, and truck drivers, among others.

Read: Logistics Management 33rd Annual Salary Survey

These jobs also tend to pay more than other jobs in the traditional service industry, which the authors refer to as Main Street services. Supply chain service jobs have an annual average wage of $63,000, and that salary is rapidly increasing.

The authors further subdivide this supply chain services category into a traded services subcategory. This includes services that are sold across regions, such as engineering, design, logistics, cloud computing and more.

Traded services jobs have an average annual salary of about $80,800, which is three times higher than the average for Main Street service jobs and about 30 percent higher than supply chain services jobs.

In addition, these jobs tend to be heavily focused on science, technology, engineering, and math, which the authors suggest reflects their high innovation potential. The volume of these jobs is growing rapidly as large companies such as Dell, GE, IBM and Intel transition from manufacturing to traded services.

In all, the Delgado and Mills supply chain economy, which includes industries that sell goods and services to businesses and governments, contains 37 percent of all American jobs and employs 44 million people.

“Supply chain industries have downstream linkages to multiple industries, which allows the innovations they create to cascade and diffuse across the economy, potentially increasing the value of those innovations.”

When the supply chain economy is categorized in this way, it paints a picture of a bright future, according to the authors. If nations focus on these supply chain services jobs, particularly the traded services ones, more well-paying jobs could be created for workers as well as more innovation overall.

Talent for Today and Tomorrow

Having access to enough skilled workers is a chief concern among supply chain executives. Participants in our Supply Chain Management: Beyond the Horizon study noted that they struggle to find individuals qualified to fill current openings, and they worry that there will not be enough professionals with the right skills to handle new jobs that are created through future innovations. “It’s a different type of talent that we’re going to need if we’re going to keep up with the pace of change,” one participant said.

APICS has always supported the growth and development of qualified talent. Our three professional designations, APICS Certified in Production and Inventory Management; APICS Certified Supply Chain Professional; and APICS Certified in Logistics, Technology, and Distribution, each prepare today’s talent to manage and innovate different areas of supply chain. You can use the APICS Education Selector to learn about which designation could best support your current role and your aspirations for tomorrow. Visit the APICS Education Selector to get started.

About the Author
Abe Eshkenazi, CSCP, CPA, CAE, Chief Executive Officer
Abe Eshkenazi currently serves as the chief executive officer for APICS and APICS Supply Chain Council. Prior to joining APICS, Eshkenazi was the managing director for the Operations Consulting Group of American Express Tax and Business Services.

Image: One Network Enterprises

Supply Chain Management: Beyond the Horizon White Papers

Managing the Complexity Paradigm
This paper offers insight into managing supply chain and product complexity by providing background into the complexity’s sources, a framework for understanding its drivers, and methods to manage it Download Now!

Supply Chain Issues: What’s Keeping Supply Chain Managers Awake at Night?
Although some of the themes presented in this paper may not be surprising, it is valuable to note that the executives interviewed, who represented more than 50 different firms, shared a common perspective about issues disrupting their businesses. Download Now!

Creating Value Through Procurement and Sourcing Efforts in Integrated Supply Chains
As part of the ongoing collaboration between Michigan State University’s Eli Broad College of Business and APICS Supply Chain Council, the Beyond the Horizon research project is investigating how the supply chain management discipline is evolving into the future. Download Now!

Realizing Supply Chain Success
This white paper presents initial research insights from the Beyond the Horizons project and introduces a conceptual model, named the bridge model, which can guide supply chain strategy development and decision making. Download Now!

More Resources from APICS (now part of Association for Supply Chain Management ASCM)