Following on the success of our recent post about the Rise of the Supply Chain C.E.O, we wanted to cover the topic of the emergence of Supply Chain into a C-suite function from another angle. That post discussed the trend of companies looking to the Supply Chain function when hiring for the most coveted role at any company: CEO. It discussed some prominent “Supply Chain CEOs” (including Apple’s Steve Cook and G.M.’s Mary Barra), and outlined the strategic advantages companies can gain from the relentless focus on customer service and mitigation of risk that Supply Chain provides. But the trend of Supply Chain’s rise to the C-suite doesn’t just mean the elevation of Supply Chain professionals into the CEO role at companies. It also means that companies are adding the Supply Chain portfolio to the executive boardroom alongside more traditional Finance, Marketing, and Information executive roles. Enter the Chief Supply Chain Officer. We read a great article a while ago from Fortune on this topic. It talks about how more and more companies are adding Chief Supply Chain Officers (CSCO’s) to their executive groups – companies ranging from emerging startups like eCommerce glasses retailer Warby Parker to established, highly-regulated Fortune 500 companies like defense contractor Raytheon. It’s true that not every organization is placing high-performing Supply Chain leaders in executive positions. But the most competitive, strategic organizations in the 21st century increasingly seem to be ones that allow Supply Chain to help drive their business. Why is this? First of all, the world is becoming more global, and the ability to manage a diversity of manufacturers and suppliers is a source of competitive advantage. For complex systems (for example in the Aerospace industry), companies value executives who can interface with the engineering function to make sure that suppliers deliver intricate products on spec and on time. And in consumer-facing industries (Consumer Packaged Goods, for example), companies are less likely than ever before to differentiate themselves from their competition based on product alone. For rapidly-scaling startups, the presence of a Chief Supply Chain officer from the get-go allows C.E.O’s to ensure that Supply concerns are top of mind, managing the high amounts of supply and inventory risk associated with product launches and growing businesses. As our interviewee and Procurement guru Wael Safwat put it a few months ago, “it’s no longer the organizations that are competing. It’s the Supply Chains that are competing.”
So what do companies gain by hiring a Chief Supply Chain Officer reporting directly to the CEO?A strategic thinker who touches every corner of the business.
The considerations involved in bringing a product to market are cross-functionally relevant. At an organization manufacturing complex systems and technologies, Supply Chain is closely integrated with Engineering. At a Consumer Goods company, it’s looped in to marketing. But at any organization, Supply Chain and its related functions of Logistics and Procurement figure into finance, operations, technology, and other vital areas. This can allow a Chief Supply Chain Officer to act as the “glue” of an organization, ensuring competitiveness and highly-integrated business processes. A relentless focus on continuous improvement. Efficiency is the Supply Chain mantra, and Supply Chain leaders of the past were focused on delivering the right amount of goods at the right time, without excess waste. But Supply Chain efficiency, when enacted at a high-profile, strategic, public facing level, impacts more than costs savings. A star Chief Supply Chain Officer will always be looking for ways to make an organization leaner and meaner, whether it’s assessing big-picture outsourcing and insourcing, improving manufacturing standards, or other business process improvements. A strategic Supply Chain leader allows organizations to assess what the organization excels at and what it doesn’t – allowing the CEO to constantly improve the business. A leader with a tireless commitment to the customer. A high-performing Chief Supply Chain Officer can have big impacts on a company’s customer experience. In the classic Supply Chain sense, they can ensure – big picture, again – that product is there to meet demand, and that customers have the kind of excellent experiences that convert them into brand ambassadors (think of Amazon). But there are other, more intangible ways that Supply Chain can earn customers’ goodwill, for example by retooling a company’s Supply Chain to focus on ethical and sustainable sourcing of raw materials and labour – making the company more ethical, more responsible, and more transparent. The trend towards hiring CSCOs is part of Supply Chain’s increasing influence in global business decisions, and its increasing profile in the wider world. A function that’s been seen as behind-the-scenes for so long that it only makes the news during a catastrophic failure is now having a coming-out-party of sorts. Today, you’re more likely than ever to have a layperson understand what you’re referring to when you talk about Supply Chain Management, and we think that’s a good thing. Some might point out that the title of “Chief Supply Chain Officer” is just that – a title, and organizations have been giving Supply Chain leaders more responsibility, oversight, compensation and dotted lines to C.E.Os for years, even aside from the existence of the “Chief Supply Chain Officers.” But we think that companies hiring CSCO’s send a solid message to suppliers, investors, employees and customers that they think Supply Chain – and its strategic advantages — are vital to their businesses. And it should be.