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The Evolution of Supply Management, Q&A with Dave Nelson

Questions and Answers on the Evolution of Supply Management with Dave Nelson

Rob Handfield (Co-Director of SCRC): Well, we’re here today at the SCRC Meeting, meeting here with Dave Nelson. Dave has been a distinguished colleague of mine for many years. I followed him in my career at Michigan State. He started as the Chief Purchasing Officer at TRW, later became the Chief Procurement Officer at Honda, and led the Honda of America facility he built in Ohio. Later Dave went to John Deere and conducted a supply management transformation there, and then finished his career up at Delphi where again they were going through a major turnaround in supply management. We’re delighted to have you here, Dave.

Dave Nelson: Thank You

The Evolution of Supply Management

Rob Handfield (Co-Director of SCRC): So, throughout your distinguished career, you know one of the things we like to hear about is, you know, kind of your views on how you’ve seen the evolution of supply management over the last twenty years and, you know, what you’ve seen as part of this journey as the key elements of change that have occurred.

Dave Nelson: Well, that’s a very interesting question, because when I first went into the world of purchasing there, it was not a career. There were no or very few heads of purchasing or procurement or supply management or supply chain management. It was looked at as basically a clerk’s job, and that’s what we did. We received the requisitions and we ordered and got the materials in, and then over the time—since, let’s say, the 1960s—every ten years or so it’s been a rather drastic change moving toward a much more professional organization. And today it is a profession. And there are a number of schools that give supply management education and this type of thing. I’m a member of something called CSSL, Center of Strategic Supply Management Leadership, and its only focus is what’s coming in the next five to ten years. It’s a very interesting group of about fifteen companies. We meet three times a year, and that’s what we focus on. Supply management is going to continue to be more and more exciting in the next five, ten, and fifteen years, and grow as the importance of the functions, particularly in the world of manufacturing. When it gets right down to it, typically manufacturing costs for products we manufacture, ten—I mean twenty percent, twenty-five percent, is in-house costs. Seventy-five percent to eighty percent is purchase costs. And so managing the purchase cost is coming to be realized is much more important than a lot of other elements of the company relative to having success and making the company successful.

Working with Companies on Real Projects

Rob Handfield (Co-Director of SCRC): Thank you very much. Well, as you know, Dave, you were really one of the founding companies of the supply chain resource cooperative here at North Carolina State. When I started here in 1999 I came to Dave and I asked you, hey, would you, what do you think about the idea of building a center where young people could work with faculty and with companies on real projects that will A) help the company, B) help the students learn, and help the faculty become more cognizant of the issues that are going on in supply management. You know as a founder obviously you believed in the role of universities in this evolution. I wonder if you might comment on that.

Dave Nelson: Yes, I still believe so much in the evolution and for the value that both bring to education as well as to the companies. When we have students who focus in on real meaningful project work with companies and by having these projects often find innovative ways in which companies can do their jobs better at less cost, and at the same time be getting an education in this world of supply management. I just don’t think it gets any better than that.

What’s Important When Considering a Career in Supply Management?

Rob Handfield (Co-Director of SCRC): That’s great. What do you see as being, you know, a key message that you want to send out to young people that are considering a career in supply management? You know, I know we have an environment now where there’s a lot of outsourcing. We’re moving into countries around the world, China and Brazil and India, where there’s been a lot of outsource. What do you see as the message you’d like to send young people that you think is important as they consider a career in supply management and consider NC State as a place to get that education?

Dave Nelson: As we said before, in the course of the next five, ten, fifteen years, supply management’s going to continue to have a greater importance in the various companies particularly in the world of manufacturing, but in companies in general. And the jobs will be at a continuously higher level and a higher pay, significantly higher pay. And if we look at the history, that’s exactly the way it’s been the last ten or twenty years. And it’s going to be that way in the next ten or twenty years. And I highly recommend to any young students who find the world of supply management of interest to pursue it, get a good education. It’s very exciting work. It has been for me and it’ll continue to be even more exciting in the future.

Key Skills Needed to Become Successful in Supply Management

Rob Handfield (Co-Director of SCRC): What do you think are some of the key skills that young people need to develop if they’re going to be successful in this field? If you were to mentor someone or coach them, what are the things you would tell them they need to work on?

Dave Nelson: Well, that’s an interesting question, and I think one of the most important things as you are spending the company’s money and buying things from other companies is to be able to communicate with the management or with your counterparts in these other companies and be able to reason and be able to figure out what are those things that you can do and how can you do those things that will be a mutual benefit to your company as well as the supplier company. So, I find all of those elements that you know in education that help with communications in the long run, and there’s a lot of different areas that do this. I think that’s important. Also important is the basic understanding of what supply management is and what it’s all about, and that piece of the education is from my viewpoint is extremely important in what North Carolina State University brings to the scene.

Rob Handfield (Co-Director of SCRC): Thank you very much. I think those themes of, you know, collaboration, creating value, communication, and managing relationships are all things that we really do try to emphasize in our partnerships with industry and in our classrooms as well. So, thanks again for coming, Dave.