Supply chain leaders are not always given the recognition they deserve, but the role is gaining in status as the function becomes increasingly important in creating competitive business advantage
The growing status of the chief supply chain officer (CSCO) was underscored when US department store chain Nordstrom promoted former Amazon vice president Alexis DePree to its board.
The move highlighted just how important the supply chain is becoming in enabling businesses across sectors, from retail to automotive, to operate effectively in an increasingly complex, globalised and online world.
As Lucy Harding, partner and head of executive search firm Odgers Berndtson’s global procurement and supply chain practice, says: “Organisations don’t just compete on products these days. The efficiency of the supply chain is becoming a competitive advantage in a way that not everyone understands.”
The issue is that, while the profession may have gained in prominence recently, particularly following the disruption to global supply chains caused by the coronavirus pandemic and more lately the Suez Canal blockage, its significance is still underestimated in some quarters.
In fact, a recent survey by Talking Logistics revealed that a mere 21 per cent of organisations have appointed a dedicated CSCO, although in 38 per cent of cases, other leaders – frequently the chief operating officer – do have executive oversight. But 41 per cent said they had no C-suite representation at all, while 44 per cent indicated the supply chain function was only sometimes or rarely involved in high-level decision-making and strategic planning.
Put another way, a seat at the top table is far from guaranteed for supply chain leaders. So why is the role failing to get the universal recognition it appears to deserve?
Supply chain isn’t sexy
A key problem, believes Gary Connors, partner at management consultancy Oliver Wight, is that it is all too often considered a reactive, backroom function. Earlier in his career when attending an awards ceremony, for example, he asked why none of his colleagues were given any recognition.
“My boss said: ‘The best you can hope for is to be seen as reliable. Supply chain managers and functions just aren’t sexy’,” Connors explains. “So if you get 35 million doses of vaccine out there, you’re invisible, but if you don’t, you’re on the news.”
Another challenge is the term “supply chain” means different things to different companies in different industries, resulting in varying levels of importance being attached to it, says Harding.
“If you’re making product and moving it around, clearly it’s a big part of how the organisation operates, so in fast-moving consumer goods, for example, you’re more likely to have a CSCO sitting on the executive committee,” she explains. “But it’s not a mainstay role yet like a chief financial officer, who you’ll find on the executive committee of most companies.”
The post is continuing to grow in status due to a number of factors though. The first is the impact of Amazon and ecommerce on changing customer expectations of availability and delivery times.
As a result, CSCOs progressively “need to be in the room to input into business strategy and customer service, and understand how to deliver on supply chain goals”, particularly with the current backdrop of political and economic instability, says Harding.
The second factor relates to the sustainability agenda, which has been steadily gathering momentum. The issue for many companies is the carbon footprint of their wider supply chain is significantly greater than their own, resulting in much of the responsibility to sort the situation out falling to the CSCO.
What makes an effective CSCO?
Given this weighty brief, the key expertise and qualities required to succeed include an ability to see the big picture both inside and outside the organisation, a remit covering not just internal and geopolitics, but also an understanding of global cultural perspectives.
Blake Sherwood, director of logistics and supply chain at medical equipment supplier NixCovid, explains: “It’s about having a strategic overview, so you need someone who can take a macro view to pivot and act quickly. But you also need a micro-thinker who can understand the small, but important, details too.”
Just as imperative are strong leadership capabilities. Because CSCOs are often responsible for the actions of hundreds, if not thousands, of people employed both in-house and by partners, sound communication and collaboration skills are vital.
“You need to be someone who can negotiate and collaborate with other functions across the supply chain both internally and externally,” says Connors. “So most leaders are affable, but can neutralise power struggles to get what’s best for the business.”
Maciej Zając, CSCO at custom packaging provider Packhelp, agrees: “It’s about being an influencer and problem solver. But also, as supply chain is such a broad subject, you can’t be an expert in every area, so you have to be prepared to learn and work with people who are smarter than you in their area of speciality.”
The CSCO’s time has come
Being able to communicate effectively in the boardroom is just as important. As Harding points out, CSCOs must be “business leaders first and functional leaders second”, which means seeing, understanding and contributing to business strategy through a supply chain lens, before executing that strategy within their own function.
A final characteristic that is only likely to grow in significance, meanwhile, is an openness towards embracing technology and data to inform supply chain strategy.
“Right now the pandemic situation is pushing the supply chain to become more tech centric,” says Zając. “The more live data you have, the more agile you can be to align with what’s happening on the market, so it helps reduce risk but also makes the business more efficient by automating and optimising processes.”
Given these dynamics, Harding believes the CSCO’s “time has come, whether we’re talking at the divisional or group level”.
“Some organisations have had a mature and well-organised supply chain for a while, but the pandemic has made others realise just how core it is from the competitive-advantage view of reaching customers. So CSCOs will increasingly have a seat at the table and what was a back-office function will be elevated to have a wider voice,” she says.