The supply chain is the backbone of the economy and the lifeline of any business. Recently, several chief executive officers (CEOs) from larger players like John Deere, Tyson Foods, and General Mills stated that their financial performance was hurt by the inefficiency of supply chains.
The chain has to delivers the value promised to customers and society – visibility is therefore king. According to the Geodis 2017 Supply Chain Worldwide Survey, supply chain visibility is the third most important priority in 2017, up from the fifth place in 2015.
However, only 6% of the 623 respondents said they had achieved full visibility across the chain[i]. As the supply chain stretches across the entire business operation, the flow and transformation of materials and parts into goods and value to customers brings CEOs to the test.
Furthermore, in the Fourth Industrial Revolution, it is the supply chain that is the ultimate strategic differentiator. Companies that fail to transform their supply-driven chains into intelligent customer-centric systems will struggle to succeed – sooner than later.
Times are volatile and uncertain in the Fourth Industrial Revolution. CEOs need operational knowledge and strategic insight to be able to well balance short with mid to long term interests and requirements.
This balancing is the daily task and challenge of chief supply chain officers (CSCOs). They know what it takes to deliver value to customers, today and tomorrow, consistently over and over again. Supply chain professionals need to know the business but also what is happening along the chain.
The Fourth Industrial Revolution[ii]
We live and operate in interconnected systems of systems. Consequently, disruptions are not anymore confined to industries, countries or even regions. One single innovation has the power to impact entire global structures. In the connected world, opportunities and threats emerge no longer within sectors alone but also at the intersections between systems. Consumer expectation, for example, spills over. What is offered in one industry is expected to be provided in other parts of the economy too. One result is the Uber of ‘everything’ – easy to use, transparent and cheaper.
The forces impacting and shaping multiple systems and their interplay need to be understood by CEOs. Leaders are required to learn how adjacent systems work and develop. Otherwise, operations risk to fail and predictions might fall short.
CEOs perform and transform
CEOs need to hold the qualities, knowledge, skills, and the experience required to lead organizations or major parts thereof towards continuous success. CEOs configure, guide, encourage, and evaluate teams and business partners. It is key to CEOs to mitigate risks and capture opportunities. Achieving this goals requires business acumen and foresight.
CEOs can hardly perform without practical hands-on business experience. Hence, future CEOs require entry positions that help them to understand the nuts and bolts of the business and career paths that allow them to gradually acquire and demonstrate the physical and cognitive capabilities needed to perform in the most senior roles in the organisations. Supply chain management provides the necessary breadth and depth for the leadership learning journey.
Supply chain professionals are strategic assets
Chief supply chain officers are strategic to any company that aims at being customer-centric. Supply chain experts provide advice on product design to avoid supply chain challenges later on, e.g. damages and other disadvantages due to unsuitable packaging. Optimising package design and materials requires that the needs and impacts of the entire system are understood[iii], including the environmental impact.
CSCOs know how to design demand-driven networks and customer touch points to differentiate the organization from competition. Superior customer experience increases the number of repeat purchases and drives recurring earnings.
While the internet of things is vital for visibility, for example, artificial intelligence (AI) promises to bring breakthroughs in demand forecasting. Anticipating consumer behaviour and purchases will allow CSCOs to align production with demand and preposition goods.
This will reduce cost and waste and improve customer experience. So does additive manufacturing, known also as 3D-printing, which allows to tailor products to individual wants in the shortest possible time.
CSCOs operate the business engine
The Chief Supply Chain Officer (CSCO) is responsible for all vital functions of the business. Many CSCOs control more than 50 percent of the organisational spending. They know where the money is made and lost. They ensure that the company delivers the orders to customers as promised – and this, under all circumstances.
Whether during a typhoon and flooding or Thanksgiving, Singles’ day and year end peak. CSCOs keep the ‘engine’ going and the ‘deck’ clean. Quality control is mantra, cost reduction obsession; highest throughput and fluidity the CSCO’s goals. CSCOs determine what CEOs see on their operational dashboards.
In summary, the supply chain professionals’ mission is to reduce risks and costs, increase cash flow and revenues, and capture strategic opportunities. They influence top and bottom line as well as brand reputation and enterprise value.
CSCOs execute the CEO’s vision – they drive the operational agenda with the long term goals in mind. The chief supply chain officers need to be strategic and operational at the same time – like their CEOs.
Entering the business of leadership
The Fourth Industrial Revolution opens up new pathways to the top of organisations. CEO profiles are shifting. Digitalization is the driver of new offerings and business models. Today’s nerds might become tomorrow’s leaders. LinkedIn looked at 12,000 CEOs from 20 countries to see what they studied[iv].
They found that already today computer science is the most popular field of study listed on CEO LinkedIn profiles, followed by economics and business. The outcome of this LinkedIn study is possibly influenced by the explosion of technology companies.
The awareness and understanding of developments and changes across the entire economy is becoming an imperative. Continual exchange with other domains, industries and geographies is the daily business of supply chain operators.
Organizations should leverage their pool of supply chain professionals to navigate the digital era, not only as experts but also as potential candidates for the company’s pipeline of tomorrow’s CEOs.
This is the abridged version of an article published at The European Business Review.
Industry and technology evangelist and polymath, assisting stakeholders across the global supply chain ecosystem – from start-ups, to asset owners, to Fortune 50 companies – in upscaling and transforming their organizations: envisioning system change, what it means, and how to stay/get ahead of the curve. Engaged in think tanks, awards committees and expert groups, including the IATA Air Cargo Innovation Awards Jury, and the World Economic Forum Expert Community, supporting projects such as the Blockchain for Supply Chain initiative