2014 APICS SUPPLY CHAIN COUNCIL OPERATIONS MANAGEMENT EMPLOYMENT OUTLOOK

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1 2014 APICS SUPPLY CHAIN COUNCIL OPERATIONS MANAGEMENT EMPLOYMENT OUTLOOK 1

2 ABOUT THIS REPORT APICS Supply Chain Council, in conjunction with the Cameron School of Business at the University of North Carolina-Wilmington, developed this report that forecasts supply chain and operations management employment. This report provides year-to-year comparisons and trend analysis where appropriate. Twice annually, approximately 50% of the APICS membership and customer base receive a request to complete an on-line survey collecting data concerning two unique employment areas: 1. Anticipated supply chain and operations management employee hiring and layoffs for the next 12-month time horizon. 2. Current salary and compensation by job function and title. Where appropriate, results are presented as a combination of data from the current and previous surveys to ensure reliability and validity of the findings. The following survey results are presented in two major sections: I. Employment hiring trends in the supply chain and operations management profession. This data will help to predict economic improvement or decline as measured by projected changes in employment. II. Salary ranges and trends in the supply chain and operations management profession. This section tracks salaries in five functional areas and over 30 job titles within the supply chain and operations management field. The data is a critical indicator of the strength and progress of the profession. Data for a third employment concern, specific knowledge/skill sets required/preferred for various job areas, is collected and analyzed every other year. 2

3 APICS SUPPLY CHAIN COUNCIL OPERATIONS MANAGEMENT EMPLOYMENT OUTLOOK TABLE OF CONTENTS Hiring Trends 4 Salary and Compensation Trends 5 General Observations 6 Educations Pays 12 3

4 HIRING TRENDS The 2014 year-end Employment Outlook projects continued economic growth for operations management, which is supported by anticipated industry hiring and layoff data. Of all respondents to the 2014 surveys, 41 percent anticipate hiring within the next 12 months. Of those forecasting hiring, 95 percent anticipate hiring within the five core areas of execution and control, purchasing/ customer relationship management (CRM), quality, resource planning and supply chain, with the most hiring anticipated in the supply chain area. For the same time horizon, only 7 percent of all respondents anticipate layoffs within the next 12 months. Of the 7 percent who anticipate layoffs with the next 12 months, 80 percent anticipate layoffs within the five core areas of execution and control, purchasing/crm, quality, resource planning and supply chain. The most layoffs are anticipated in the execution and control and supply chain areas. Since 2009, the gap between new hires and layoffs has grown from a net gain in employment of 3 percent to the current gain of 35 percent, representing increasing net growth in our industry. Figure 1 shows a rising trend in expected hiring coupled with a stable and flat layoff projection supporting a strong and stable employment outlook for operations management professionals for the next 12-month period. Figure 1: Expected Hiring/Layoffs of OM Professionals in Next 12 Months 50% 45% 40% % of Respondents 35% 30% 25% 20% 15% 10% 5% 0% Jun-0 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 hiring layoff Linear (hiring) Linear (layoff) 4

5 SALARY AND COMPENSATION TRENDS The results of the 2014 salary and employment survey continue to support the stable operations management profession salary trends we have reported over the last seven years. The salary component of the survey tracks compensation in over 30 different job titles in the operations management field. Respondents were asked to report not only current salary but also any other cash compensation received. For reporting purposes, respondents were grouped into five recognized categories (execution and control of operations, purchasing/ CRM, resource planning, and supply chain management) rather than by individual job titles to illustrate the variability of income between job categories. After years of non-significant response rates in the quality job classification category, we have stopped analyzing it and have dropped it from this report. Table 1 shows salary and other compensation by job category. Table 1 reports that the average annual compensation across all operations management job categories was $95,905 (less than a 2% variation from 2013). Average compensation ranged from a high of $101,974 for the execution and control of operations category; the supply chain and other job classifications were next with combined salaries of $101,707 and $98,650, respectively; the low was $68,114 for the resource planning job classification. The resource planning job classification continues to report the lowest or second lowest total compensation in all year-end reporting periods. Table 1: Average Compensation by Job Category (in USD) Job Category Average Salary* Average Bonus Average Total Compensation Execution and Control of Operations $92,033 $9,941 $101,974 Purchasing/CRM $68,755 $5,680 $74,436 Resource Planning $64,325 $3,788 $68,114 Supply Chain $91,204 $10,503 $101,707 Other $89,722 $8,927 $98,650 Overall Weighted Average $86,684 $9,222 $95,905 *Average salary across all respondents (salaries weighted by number of respondents in each job category) To support the usefulness of the data, survey respondents were also asked to provide demographic information including age, gender, education, years of industry experience, certifications achieved, geographic location and industry. The results in Tables 2 through 6 illustrate how compensation averages vary across these variables. 5

6 GENERAL OBSERVATIONS Table 2 shows how average compensation levels varied across the seven geographic areas of North America (illustrated in Figure 2), including Canada. Table 2: Average Total Compensation by Geographic Area and Gender Gender Geographic Area Female Male Average* Northwest** $83,279 $85,949 $85,059 Southwest $95,866 $112,343 $106,114 North Central $68,387 $106,855 $88,068 Midwest $78,492 $102,908 $94,118 South Central $74,624 $97,480 $92,617 Northeast $79,101 $122,723 $106,652 Southeast $85,592 $104,255 $98,457 Canada $62,861 $85,980 $79,237 *Average salary across all respondents (salaries weighted by number of respondents in each job category) **Fewer than 25 responses for this category. 6

7 Figure 2: Geographic regions in the United States WA OR NV CA ID AZ UT MT WY CO NM ND MN SD IA NE KS MO OK AR NY WI MI PA IL IN OH WV KY VA NC TN SC MS AL GA NH VT ME MA RI CT NJ DE MD TX LA FL On average, practitioners in the Northeast, Southwest and Southeast earned more than those in any of the other geographic regions in North America ($106,652, $106,114, and $98,457, respectively), while operations professionals in the North Central U.S. once again earned the least ($88,068). While the North Central has the lowest reported salaries, average salaries in this geographic area have increased by approximately 12% in the last year. Canadian salaries continue to lag average U.S. salaries. It is not surprising that the data shown in Table 2 suggests that gender plays a role in total compensation. There have been numerous research studies looking at gender bias in salary compensation. Our results indicate that gender bias may also exist for operations management professionals. Since inception of this study regional salaries have fluctuated, but male salaries have consistently outpaced female salaries in all regions. In the current report the most striking disparities can be found in the North Central, Northeast and Midwest regions, where females earn on average 36 percent, 36 percent and 24 percent less, respectively, than their male counterparts. Canada shows gender bias as well, with females earning on average 27 percent less than their male counterparts. Once again, this male-female salary dispersion has been consistent across all data collection periods, while varying by geographic area. 7

8 To gain further insight into possible gender bias, Table 3 and Figure 3 show average total compensation by job category and gender. Across all respondents, the average total compensation for females is $79,562 compared to $104,244 for males. The gender gap in compensation is most pronounced in the Other area, with males making approximately 44 percent more than their female counterparts. The purchasing/crm and supply chain areas also show great dispersion as well, with males making on average 39 percent and 29 percent more than females in the same job classification. For all job areas, compensation for males is approximately 31 percent higher than that of females in equivalent job categories. Table 3: Average Total Compensation by Job Category and Gender Female Male Average Execution and Control of Operations $92,784 $105,239 $101,974 Purchasing/CRM $61,360 $85,238 $74,436 Resource Planning $65,014 $70,309 $68,114 Supply Chain $85,174 $109,704 $101,707 Other $75,983 $109,752 $98,650 Overall Weighted Average* $79,562 $104,244 $95,905 *Average salary across all respondents; includes base salary and bonus compensation (salaries weighted by number of respondents in each job category) 8

9 Figure 3: Average Total Compensation by Job Category and Gender $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 Female $ Execution and Control of Operations Purchasing/CRM Resource Planning Job Area Supply Chain Other Male Note: Average salary includes base salary and bonus compensation Considering age in combination with gender makes salary discrepancies even more pronounced. As industry strives to reduce gender bias in salary compensation, it is promising to note that pay scales are more consistent for younger employees. Table 4 and Figure 4 indicate that the difference in compensation between genders tends to narrow with younger hires. For all employees under 31 years of age, compensation disparities are less than the overall average shown in Table 3, with female salaries higher (20 percent) than males in the age range and 6 percent higher in the 25 and under age bracket. This may suggest that new policies are being put in place at companies to correct for compensation discrepancy by gender. This is consistent with prior reporting periods. At higher age ranges, males consistently earn higher salaries approximately 51 percent higher in the age range. 9

10 Table 4: Average Total Compensation by Age and Gender Age Range Female Male Average* <=25 $60,380 $57,136 $58, $77,917 $65,104 $69, $58,983 $81,012 $72, $88,127 $109,275 $102, $79,030 $105,104 $96, $79,385 $120,213 $105, $92,491 $111,823 $104, $79,906 $112,724 $103,289 >60 $83,608 $128,460 $123,184 *Average salary across all respondents; includes base salary and bonus compensation (salaries weighted by number of respondents in each job category) Figure 4: Average Total Compensation by Age and Gender $140,000 $120,000 $100,000 Salary $80,000 $60,000 $40,000 $20,000 Female $0 <= >60 Male Age Note: Average salary includes base salary and bonus compensation 10

11 Including years in industry along with gender (Table 5, Figure 5) supports the compensation gap shown in Tables 3 and 4. For all age ranges, female salaries are approximately 23 percent less than males. Table 5. Average Total Compensation by Years in Industry and Gender Years in Industry Female Male Average <=5 $62,900 $67,657 $66, $76,930 $87,918 $82, $82,496 $99,116 $93, $83,688 $116,794 $107, $85,560 $121,737 $110, $89,164 $126,314 $112, $87,666 $120,394 $109, $93,664 $136,118 $129,795 *Average weighted by number of respondents in each category Figure 5: Average Salary Vs. Years in Industry $160,000 $140,000 $120,000 $100,000 Salary $80,000 $60,000 $40,000 $20,000 Female $0 <= Male Years in Industry Note: Average salary includes base salary and bonus compensation 11

12 EDUCATION PAYS According to the data, employees who have completed a bachelor s degree can expect approximately 24 percent more in total compensation than a comparable employee with a high school degree. Dedication to an advanced specialized master s degree will command approximately 14 percent more than a bachelor s degree and 41 percent more than a high school diploma. Individuals completing a master of business administration (MBA) degree can expect approximately 12 percent higher compensation than those with a specialized master s degree and approximately 60 percent more than those with only a high school diploma. When adding the variable of gender to education, the gap becomes widest at the bachelor and specialized master levels. For those employees with a bachelor s degree, males are earning approximately 30 percent more than females, and males with a specialized master s degree show a 44 percent increase over females. This is consistent with all prior years of reporting. The compensation gap between male and female employees begins to narrow slightly with an MBA degree. From Table 3 we saw that overall, males were earning approximately 31 percent more than females for all job classifications. Table 6 and Figure 6 show that this gap narrows to approximately 17% with an MBA degree. Table 6. Average Total Compensation by Education and Gender Education Level Female Male Average* High School $74,323 $75,671 $74,901 Associate/Technical $70,091 $75,366 $73,132 Bachelor s $77,919 $101,376 $92,865 Master s $79,073 $114,117 $105,476 MBA $105,387 $122,890 $119,617 PhD** $111,550 $128,168 $121,936 *Average weighted by number of respondents in each category **Fewer than 25 responses for this category 12

13 Figure 6: Average Salary by Education $140,000 $120,000 $100,000 Salary $80,000 $60,000 $40,000 $20,000 Female $0 High School Associate/Technical Bachelor s Master s Education Level MBA Ph.D. Male Note: Average salary includes base salary and bonus compensation Similar to the surveys conducted in previous years, the share of survey respondents who have obtained APICS industry certification continues to increase. Approximately 45 percent of survey respondents hold a CPIM (Certified in Production and Inventory Management) designation and approximately 25 percent currently hold a CSCP (Certified Supply Chain Professional) designation (Table 7). For those employees holding these advanced certifications, not only do compensation levels move up significantly (Table 7), but also the positive impact on hiring is extremely strong (Figure 8). Among respondents across all surveys from , individuals with CPIM designations have received an average of 12% higher compensation compared to those without the designation, as well as an 83% favorable impact on hiring decisions when compared to those without. Similarly, those with the CSCP designation have also received approximately 12% more in compensation over those without the certification, along with an 81% favorable impact on hiring decisions compared to job candidates without this credential. 13

14 Table 7. Average Increase in Compensation with Certification Certification % of Respondents with Certification Average % Increase in Compensation* CSCP 25% 12% CPIM 45% 12% *Compared to respondents without the certification Figure 7: Average Salary by Certifications ( ) Salary $110,000 $100,000 $90,000 $80,000 $102,201 $92,187 $105,064 $94,631 $70,000 $60,000 Yes No CPIM CSCP 14

15 ABOUT APICS SUPPLY CHAIN COUNCIL APICS SCC is an unbiased nonprofit organization that advances supply chain and operations management and innovation through research, education, and publications. APICS SCC maintains the Supply Chain Operations Reference (SCOR ) model, the supply chain management community s most widely accepted framework for evaluating and comparing supply chain activities and performance. For more information, visit apicsscc.org. A special edition of the Production and Inventory Management Journal. ISBN: APICS 15

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