I realise I may be going out on a limb here, but really, it’s worth pointing out some common executive misconceptions which can lead to less-than-perfect supply chain decisions. After all, as someone once said, we live and learn.
If just one or two of our readers adjust their thinking based on the information in this post, then it will have been well worth writing. So here they are … three of the most common executive supply chain misconceptions. I’ve even categorised them by which offices are most likely to fall victim to them.
1. The Big Chief Executive Booboo: Supply Chain Leadership Choices
The latest news about executive appointments is both good and bad, so let’s begin with the good news. More and more CEOs are being appointed for the value offered by their supply chain backgrounds.
At the same time and perhaps as a result of this, many larger companies now view the supply chain holistically, rather than as a collection of loosely connected functions. It’s not at all unusual to see a Chief Supply Chain Officer (CSCO) on a company’s executive roster.
The bad news is that it’s still not uncommon for senior supply chain appointments to be filled by leaders with little or no supply chain background. The message here then, is for you if you’re a CEO from a background other than supply chain:
Don’t fall victim to the misconception that supply chains can be managed effectively by non-supply chain people.
If you don’t have a supply chain background yourself, you really should appoint a strong supply chain leader with experience and a record of high performance. That person will be one who can leverage opportunities to strengthen your supply chain and increase the value it adds to your business.
2. The CFO/CPO Faux Pas: Supply Chain As a Cost Centre
Another tenacious executive misconception about supply chain and logistics is that it must be viewed as a cost centre, measured on its cost as a percentage of sales, or something similar.
Companies that have graduated to a different approach—seeking to leverage supply chain for competitive advantage—are the ones more likely to thrive in this day and age.
Instead of looking primarily at the cost impact of supply chain activity, and stripping costs out wherever and whenever possible, procurement and financial executives would find greater advantages from thinking in terms of customer profitability. Admittedly this will be a big shift for some organisations, but one which can lead to greater market share and business growth.
Typical characteristics of companies with a profit-oriented view of the supply chain include:
- The application of customer-focused metrics and KPIs to measure supply chain performance
- The provision of extra, value-adding services for the company’s customers
- Customer segmentation and tiered levels of service
Your supply chain can drive profits for your company, but only when executive leaders commit to supply chain strategy and align it with that of the business overall. Wringing dollars out of the supply chain on the other hand, is more likely to stifle growth than to support it.
3. The CIO Blooper: Technology Before Business
As a CIO, you surely have a keen focus on supply chain and logistics in your company. This after all, is where you most need transparency and a wealth of data to manage effectively. Supply chain technology platforms probably make up a large portion of your spend and certainly make a huge difference to logistics efficiency.
If you make the mistake of putting technology in front of the process and people performance though, it will be your supply chain teams that have to labour under your executive misconception.
I have seen so many companies implement solutions that complicate, rather than simplify physical processes. These changes are often made in the interests of transparency, but add unnecessary process complexity, leading to workforce shortcuts that plunge logistics activity back into opaqueness.
What’s the right thing to do? Just be sure to involve the members of your company’s functional teams in the selection, design, and build of supply chain-related information and business management systems. By doing so, you will usually find it possible to simplify processes and acquire the visibility needed to manage the supply chain effectively.
Live and Learn With Your Executive Peers
No matter how lofty the position we hold, there is always room to learn more and especially, to learn from our mistakes. Of course it’s always preferable to learn from the mistakes of others (if mistakes must be made at all) than from your own.
That’s one of the big benefits of the Supply Chain Leaders Boardroom, a limited member development program that connects you with other executives, enabling you to get together and share ideas, plans, and to learn from one another’s experiences.
In this environment, you can get your supply chain right by learning about what other’s got wrong, and similarly, help others to avoid the executive misconceptions that might limit their supply chain and overall business success.
Sound like a good idea? Then contact us today to find out more or to register your interest in Supply Chain Boardroom Membership. We look forward to hearing from you.