Anyone who’s been paying attention knows that Supply Chain Management has emerged from its status a back-office function to become a major strategic differentiator for business. Welcome the Supply Chain CEO!
Over the past few decades, companies have realized that the way they bring products to market – from sourcing parts and services, to manufacturing, to shipping, to distribution – isn’t just a practical necessity, but an avenue for competitive advantage.
For example, we wrote recently about how Amazon’s purchase of Whole Foods Market represents more than a new stream of brick and mortar business, but the possibility of improving its last mile delivery – the so-called “Holy Grail of Logistics,” and therefore gaining a further leg-up over its eCommerce competitors in the grocery category.
As a result of technology and big data providing insights about every stage of the supply process, the Supply Chain profession has taken off. What was once seen as either a purely administrative or blue-collar profession has stormed the gates of executive business, with more companies appointing Chief Supply Chain officers – analytical, proven professionals who are able to build relationships with a diversity of internal and external partners, as well as provide the kind of operational excellence that allows companies to get ahead of the competition.
An article in the Wall Street Journal called Supply Chain the hot new MBA, outlines how more and more future business leaders are also coming around to seeing the function as a career of the future.
In the past few years, there have been more examples of Supply Chain professionals stepping not just into the C-suite, but into the coveted Chief Executive position itself. This great article provided some great perspective on the topic. It comes from Supply Chain Management Review, a leading publication specializing in the field.
The article, written by Shay Scott of the Global Supply Chain Institute, describes how the trend of Supply Chain Professionals rising to the CEO position at major companies is only increasing. Scott gives the examples of Apple CEO Tim Cook and GM’s Marry Barra as people who have risen through the Supply Chain function to lead their companies.
Apple’s strength, historically and under the leadership of the late Steve Jobs, has undoubtedly been its products. But in the 21stcentury, more and more have recognized that Apple’s profitability and competitive advantage have come from a world-beating Supply Chain (one analysis from 2012 outlined how the company turns around its inventory in a staggering five days).
And Tim Cook’s rise to CEO, in large part, is owing to his transformation of the company operations starting in the late 90’s, reducing inventory and costs, and developing the country’s overseas supplier base.
Companies like Amazon are able to achieve major growth through a relentless focus on customer service. And with its drive to ensure products and services are delivered on time, at the right place, with the right cost, Supply Chain is renowned for its customer service success.
As the SCMR article says, “The notion that customer service or the supply chain itself often has more importance than the product – think of Amazon – only serves to further emphasize the value of supply chain expertise in senior leadership.”
But the development of Supply Chain talent into CEO-ready leaders is about more than focus on customer service and a relentless attention to the bottom line: it also has to do with the function’s increasing integration with all aspects of business.
Whereas different Supply Chain functions used to be siloed (planning, operations, procurement, etc.), they’re now more holistically integrated under central leadership and centres of excellence.
Beyond that, Supply Chain now touches almost every aspect of a business, and it’s only becoming more involved with functions as diverse as sales, marketing, and finance, as well as operations. This allows senior Supply Chain leaders to develop executive skills and a holistic understanding of an entire business from a strategic perspective.
The SCMR article offered some other great advice about how senior Supply Chain professionals can think like CEOs – allowing them to develop their perspectives and skills so as to be able to speak to business leaders and earn a seat at the boardroom table:
- Supply Chain leaders should learn how to speak the language of CEOs. Instead of only using Supply Chain terms like fill rate, inventory turns, etc., they should speak in terms of a given decision’s financial impacts on their companies’ bottom lines (revenue, margin, working capital, etc.)
- Supply Chain leaders should cultivate an understanding of global trends, political and economic developments, and social changes. This allows the Supply Chain to address global challenges proactively, and to be part of the broader context of the business.
- Supply Chain leaders should work to forge connections with as many aspects of the business as possible. This means working like a matchmaker to develop relationships between seemingly-disparate parts of the business. This is the kind of added value that true business leaders are able to provide.
For anyone reading the signs and following the trends of global business, it’s clear that Supply Chain’s time has come. While many customers and laypeople haven’t even heard of the discipline (we wrote about how Supply Chain only seems to make the news when there’s a failure), we guarantee they will soon.
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