Once regarded as a souless back-office function, supply chain management has emerged as one of the hottest fields in American busi- ness. Thought leaders and industry gurus point to the supply chain as a pow- erful competitive differentiator, while corporate titans like Wal-Mart, Dell, and Toyota brandish their supply chain capabilities like swords. Given the climate of the times, it's no wonder the executive suite has finally woken up to the value of the supply chain.
For evidence of the profession's growing stature, you need look no farther than DC VELOCITY's 2007 Salary Survey. The median salary for the 876 survey respon- dents was $90,000, with the mode (or most frequent response) being $100,000.
The mean or average salary came in even higher at $140,533. This number, however, may be skewed by the 11 people who reported earning over $1 million. All of these millionaires were senior vice presidents, corporate officers, or presidents at companies with more than 5,000 employees.
Given DC VELOCITY's diverse readership, it's no surprise the responses ran the gamut, ranging from over $4 million to $23,000. But there were plenty of responses that fell between these two extremes—a little more than half of all respondents earn between $75,000 and $149,000.
Logistics and supply chain professionals' salaries appear to be on a par with those of their peers in other parts of the organization. Purchasing professionals, for example, earn $78,470 a year, according to a recent survey by the Institute for Supply Management (a similar survey conducted by Purchasing magazine put the number at $83,205). IT professionals and accountants earn salaries in that range as well. Janco Associates Inc.'s 2007 IT Salary Survey reports a median salary of $78,652 for IT professionals. The Institute of Management Accountants' 2005 salary survey put its members' median salary at $91,823.
DC VELOCITY readers also indicated that their salaries have, for the most part, increased from last year, although not significantly. According to the results, 78 percent of survey respondents saw their salary increase. (Another 17 percent say their salary remained the same, and 5 percent say it decreased.) Of that 78 percent, however, 66 percent say that their salary increased by 5 percent or less.
Other signs of respect
Salary size is not the only indicator of logistics and supply chain management's growing stature. Some 69 percent of respondents say that over the past three years, the number of functions that they manage has increased, while only 5 percent say it has decreased. The remaining 26 percent say there has been no change.
Furthermore, 54 percent report that they have direct or indirect management control or influence over the typically broad and strategic area of supply chain management. With this broad reach comes more money. The survey results show that those who have control or influence over supply chain management earned more than those who did not. Those in supply chain management had a median salary of $100,000 and an average salary of $183,026. Those not involved in supply chain management had a median salary of $80,000 and an average salary of $90,197.
That's not to say that DC VELOCITY readers have abandoned their traditional distribution focus; 61 percent of readers have influence or control over logistics management, and 69 percent have influence or control over warehouse/distribution center management.
Of course, what they're called has a lot to do with what respondents earn as well. Exhibit 1 shows median and average salaries salary by number of years at companyby title. As the table illustrates, when it comes to median salaries, the average senior vice president earns more than 2.5 times the salary of the average supervisor.
Does experience count?
The fast-changing nature of supply chain management—and the information technology that supports it—would seem to favor younger managers. The survey results, however, indicate that the picture is slightly more complex.
If you look at median salary by age (see Exhibit 2), the results indicate that after 45, the median salary increases only gradually with age. (There does seem to be a leap in salary after the age of 60, but the sample size for this group is small, with only 38 respondents.) Even this slight age advantage disappears if you adjust for title. Exhibit 2 also shows the median salary for managers (who represent the largest group of respondents). As the table shows, there's little correlation between the age of a manager and median pay. Likewise companies seem to value an employee's experience in a logistics-related job only up to a point. After 15 years of experience in logistics-related jobs, median salaries rise only slightly for all respondents and actually drop for those whose title is manager (see Exhibit 3).
However, if you look at average salary, it's a different story. Across all titles, average salary grows significantly as the age of the respondents goes up. The significant difference between median and average salaries after the age of 56 indicates that there may be a few people in these age groups in high-level positions who are earning very large salaries. In fact, nine of the top 10 earners are over the age of 56 and all are over the age of 45. This discrepancy is not seen with managers. Just as with the median salaries, average salary drops after age 45, until respondents reach the age of 60, when the average rises to $93,182. (The sample size for this age category, however, is only 11 respondents.)
Average salaries for all respondents also continue to grow substantially as the employee's number of years in logistics increases. Again of the top 10 earners, all had more than 15 years of experience. Salaries for managers also rose steadily until they reached around 20 years of experience. Then the rate of increase levels out, rising only 1.2 percent from the average for those with 16-20 years of experience to the average for those with more than 25 years of experience.
In short, title is much more important than experience when it comes to salary. However, a high percentage of those perched on the top rungs of the corporate ladder are in their 50s and early 60s and have over 15 years of experience in logistics. This result implies that experience is a factor in who gets promoted or hired to those highly compensated upper management positions.
What about number of years at the current company? The survey results showed no clear connection between loyalty to the company and salary. Across all titles, average salary rises steadily as the years of service at the company increase—or at least up to 25 years (see Exhibit 4). Median salary, however, shows no predictable pattern, with salaries rising for the first 15 years of service, holding steady from years 16-20, then jumping up at year 21, only to fall back down again after 25 years of service. Similarly, there seems to be no clear correlation between number of years of service at the current company and the average or median salaries for managers.
What accounts for higher pay?
We also took a look at some other key factors with the potential to affect pay—education level, location, size of the company, and gender—to see how they correlated with salary. The clearest results are for education level. As the level of education increases, so do the average and median levels of pay (see Exhibit 5). Interestingly, even those readers whose education ended with a high school diploma (26 percent of all survey respondents) are still earning high salaries, with a median salary of $72,000 and an average salary of $86,597.
Working in New England can also bump up the pay you receive. Based on both median and average salary, DC VELOCITY readers in New England earn more, on average, than their peers in other regions of the continental United States (see Exhibit 6). This proves true even if you hold the position constant, as is seen by looking at the median or average salaries for managers. In most other regions of the continental United States—the West, Middle Atlantic, South, and Midwest— salaries remained pretty much consistent, although average salaries in the Southeast lagged slightly behind the rest.
Size of company can also have an impact on pay. Average and median salaries generally tended to rise by number of total employees both for all respondents and for managers (Exhibit 7). The one exception is companies with 501-1,000 employees, where median salaries for managers dipped.
A look at the results broken down by gender yielded some interesting findings (see Exhibit 8). Women make up roughly 10 percent of all survey respondents; yet they earned five of the top 10 salaries reported in the survey. As a result, when you look at average salary, women seem to be earning significantly more than men— $303,695 vs. $112,691. Median salary, however, tends to be less susceptible to outliers. These figures show women earning significantly less than men—$70,000 vs. $91,500. In fact, if you look only at the manager level, it's clear that the average female manager doesn't earn as much as her male counterpart. Female managers earn a median salary of $60,000 and an average salary of $65,774, while male managers earn a median salary of $75,104 and an average salary of $80,225.
No matter what your gender, education level, location, or level of experience, one thing remains consistent: Logistics is a lucrative field. And as recognition of the strategic role of logistics and the supply chain grows, compensation is likely to follow suit.