Supply Chain Frontiers issue #3. Read all articles in this issue.
The traditional practice of including logistics as an elective concentration area within a broader, more general two-year MBA degree has served the industry's needs for several years. However, recent business trends have raised the need for a more specialized and analytical academic program to better educate and prepare the logisticians of the future. As the role of supply chain executives becomes more demanding, the need for focused logistics education is becoming more urgent.
Not only are logistics professionals demanding this kind of education, companies are rewarding them with substantial salaries. The reason for the change is evident across today's business world. The need for world-class logistics operations has never been higher. Market forces are transforming logistics and increasing its importance within corporations. Globalization, the growing complexity of customer requirements and ever growing competition all point to a greater need for expertise in the design and operation of systems to support the flow of information, products and money.
In a recent article in the Harvard Business Review, Michael Hammer, pioneer of the business reengineering movement in the 1990s, even claimed that operational innovation is the major source of sustainable competitive advantage for a firm. His examples are drawn straight from the supply chain management realm and include Wal-Mart Stores' pioneering use of cross-docking and Dell Computer's trend-setting combination of demand and inventory management.
The expanding role of logistics calls for different types of individuals. In a recent AMR Research article, analyst Kevin O'Marah noted the need for supply chain professionals who specialize in "translating customer needs into supply chain execution." These people must be "designers, marketers, coordinators, [and] problem solvers," he said. This is a far cry from the traditional logistics manager who was asked to focus solely on transportation, inventory, warehousing or another single specialty.
The objective now is broader: mastering the art and science of getting business done.
Even the mainstream press is noticing this growing need. USA Today recently wrote of the growth of professional science master's degrees, noting "business is getting too scientific to be managed by businessmen." Logisticians now must solve tough problems and lead teams that cross corporate, cultural, and geographic boundaries.
These new logisticians recognize that continuing education must be an integral part of their professional development. Look at how the demand for focused courses in supply chain management is increasing, a trend documented by various studies.
The 2003 Survey of Career Patterns in Logistics by Ohio State University found that 95% of logistics professionals had baccalaureate degrees and just under 50% had master's degrees. The authors noted there is "a new generation of degreed logistics graduates who are making their way into the logistics executive levels of their firms."
A 2004 study by the Graduate Management Admission Council reports that supply chain management/operations ranks as the sixth most requested area of specialization for MBA.
In its annual review of graduate business schools, U.S. News and World Report for the first time decided on Supply Chain/Logistics as a specialty area worth ranking.
My experience at MIT's Center for Transportation & Logistics leads me to agree with this trend. The MIT Master of Engineering in Logistics degree is an intense nine-month graduate degree program that focuses solely on supply chain management and logistics. Applications to MLOG have grown at an average annual rate of 34% since its inception in 1999. This has occurred as applications for general business degrees have been in decline. This speaks to the growing demand for focused education in logistics.
The critical questions we educators and professionals must ask are: Are we teaching the right skills to the right people? Are we arming the supply chain professionals of the future with the skills and know-how to become world-class "problem-solvers" who will be able to create new "operational innovations" in their own companies?
Logisticians of the future will require analytical and leadership skills that are best taught through extensive, hands-on and focused teachings that are not readily available in the general MBA program that subsumes logistics as a minor subject.
For example, logistics professionals with three to eight years' experience generally will have focused on a single specialty area, such as transportation, procurement or warehousing. To advance their careers, however, they need to fill in the gaps in their supply chain knowledge. For these older students, leaving the workforce for two years to earn a general management degree, where the supply chain concepts are essentially electives in the second year, can be difficult to justify economically. A shorter, but in-depth course of study might make more sense. Similarly, those who have already completed an MBA and are looking for more in-depth education than a week-long executive training class, can also benefit from these more in-depth programs.
About 15% of incoming students to MIT's MLOG program already have an MBA. Similarly, 50% of Georgia Tech's 18-month Executive Masters in International Logistics program participants enter with MBAs. These candidates want to develop their analytical, information technology and professional logistics skills.
At MIT, we have found that individuals with an industry track record make excellent students. These students learn not only from the professors and guest practitioners, but also from each other. This is especially true since, at this age, each student is an expert in at least one aspect of supply chain management.
Moreover, skilled logisticians are being amply rewarded by companies. Median annual salaries and bonuses for the 2004 MLOG graduates that landed jobs were in the $90,000 to $100,000 range. This is an 80% increase over the median salaries at the time of enrollment into the MLOG program.
The message for logistics educators is that teaching general management skills is fine, but keeping pace with the upwardly mobile logistics profession requires much more. These individuals need to know how to lead as well as to design and operate complex systems and processes. Further, they must be able to convince, negotiate and sell these ideas to executives, customers and vendors alike.
Logistics education programs have to become more responsive to these demands by providing a blend of analytical and leadership skills, geared to the specific demands of a changing market. The best vehicle for these teachings is a focused program that delves deeply into the industry and develops problem-solving capabilities.
Perhaps in this sense the MBA is becoming the new undergraduate degree in that it is the foundation or starting point for a professional's life-long education process.
This article was written by Chris Caplice, Executive Director of the Master of Engineering in Logistics Program at the MIT Center for Transportation & Logistics, and reproduced with permission from Traffic World magazine. The article appears in Traffic World's annual Guide to Logistics Education, which can be found at www.trafficworld.com. Chris Caplice can be contacted at caplice@mit.edu.