Interview: David Noble, chief executive officer, CIPS
Chartered Institute of Purchasing and Supply (CIPS) chief executive officer, David Noble, discusses the future of supply chains, fuel costs and major challenges facing global logistics.
Can you please explain your history with CIPS and what the organisation is all about?
I have been a member for 30 years now. Three years ago I was asked as a supply chain director of the FTSE 100 if I would be willing to run the CIPS institute and it is a challenge I have gratefully accepted. At present the supply profession has never been more in demand than what it is now. CIPS is growing its offices all around the world. We claim that we are the largest trade association in the world with 65,000 members and this figure has been growing dramatically − no more so than here in the Middle East. Next year the organisation will have been in operation for 80 years. Above all we are here to enhance the profession of procurement and supply. We manage three streams. Firstly, we have a membership stream, so professionals can get access to the best practices tools and techniques. We have an education stream, which is viewed as the standard around the world (MCIPS is the equivalent of a degree in the UK). And finally, the corporate stream attempts to support the industry at all levels − not just qualifications, but the ability to help a CPO or supply director with the challenges they face. We provide the whole gamut of skills that you need to be successful in the industry.
What would you describe as the main challenges facing a firm’s supply chain today?
The main challenge is the economies and managing cost. Additionally, risk remains a real threat – this has been highlighted by the Japanese nuclear crisis, which has focused the world on the sector’s environmental footprint. In terms of trade, the global nature of the world means everyone now trades in a global market whether they like it or not. Supply chains are global and therefore because they cover every aspect and divsion of the business, there are real differentiators to success.
In this time of economic uncertainty what approaches can firms take to manage risk?
Having professional management in your supply chain is absolutely fundamental. Too often I see supply chain managers who are not qualified and inexperienced and they are being caught out by poor contract management and poor negotiations. It’s also essential to have high standards. I believe the industry should be licensed and this is a crusade that Chartered Institute of Purchasing and Supply is driving.
What measures can the world take to address piracy?
This is a very topical issue for the Middle East region as it is for the rest of the world because of the knock on effect. If you are going to ship products around the world then you should insure them. There is also a growing trend towards not taking ownership of the products. Companies called aggregators or consolidators are in the business of taking these risks and they will manage your stocks for you.
Do you think that piracy is just the beginning of what could be a massive threat to global supply chains? I.e theft on route.
I don’t believe this will be a problem. With advanced technology such as enhanced tracking, companies are aware immediately when the product goes offline. I think companies will eventually find ways around the current piracy problems and improve their security infrastructure and tracking ability.
With fuel costs being a major cost for logistics firms what approaches do you think firms will need to undertake to decrease costs?
I see a world that will move towards more local sourcing. If you look at the drivers for manufacturing in offshore countries that was all about labour costs, but labour costs are slowly equalising and transport costs are still increasing. The benefit of taking cheap labour on the other side of the world is reducing and this is being more than offset by the higher costs of logistics. There is no doubt that logistics costs will keep rising and customers will not pay higher transport costs. This leaves logistics firms with a dilemma − do you make it locally at a higher cost, or do you find ways of getting the logistics costs down?