How to Get Supply Chain Into the Boardroom
This guest post comes to us from Argentus Supply Chain Recruiting, a boutique recruitment firm specializing in Supply Chain Management.
One topic we keep returning to on the Argentus blog is the issue of Supply Chain raising its profile within business. We’ve discussed the emergence of companies hiring Chief Supply Chain Officers, as well as Supply Chain’s ascension into the most high-impact role in business: the CEO function. Suffice it to say that companies around the world – including some of the most relevant and innovative companies – are placing an increased amount of responsibility on the long-undersung function of Supply Chain Management, a function that, until recently, companies saw as a back-office, transactional aspect of business that didn’t have a big role to play in innovation and competitiveness.
No longer. We loved this recent major feature in Supply Chain 24/7 about how far the field has come, as well as how Supply Chain leadership can get more buy-in from executives at their companies.
It’s a meaty feature with a lot to dig into, but we wanted to highlight a few points and mention our own take.
There’s a common refrain among Supply Chain – and Procurement – Professionals that the board “doesn’t understand” the value that they bring to the table. This feature does a good job of describing how it’s the Supply Chain function’s job to make corporate leadership understand their value, and it also offers some great approaches for doing so:
Supply Chain leaders need to establish their reputations as trusted business partners. Crucially, they need to establish ways that Supply Chain is a driver of innovation and revenue growth rather than cost-cutting. One interesting take is that companies actually tend to take Supply Chain’s cost-cutting for granted.
They need to provide quantified metrics that board members can understand. Fill rate and asset utilization, for example, don’t mean much to board members, so Supply Chain professionals need to work to translate Supply Chain success into financial metrics that are understandable to the wider business community.
They need to identify Supply Chain ambassadors to help interface the function with the rest of the company. They need to be able to speak simply about Supply Chain issues, without resorting to jargon. From our perspective, time and again this “translation” is the critical and most difficult part of becoming a Supply Chain leader – but companies reward people who are able to do this handily.
One of the greatest points that the article makes is that part of the reason Supply Chain doesn’t get its fair shake in boardrooms is because it tends to play more of a supporting than starring role. But more than ever, that supporting role is incredibly crucial to support almost every one of the more “flashy” activities a company does a company does, from launching new products to expanding into new countries. In the authors’ words: “providing truly distinctive customer service or expanding into new markets is unthinkable without a world-class Supply Chain to support the chosen strategies.”
The article identifies how miscommunication, more than anything, contributes to misconceptions that companies have about Supply Chain. For example, many people still think Supply Chain is a fancy term for Logistics, rather than a broader practice that provides companies with an overall understanding of their resources up and down the value chain. As a result, some companies have rebranded their Logistics function as “Supply Chain” without broadening the function’s responsibility. Another major misperception is the (outdated) idea that Supply Chain is only about cost cutting and the timeliness of deliveries, when in fact it’s now a driver of revenue growth. The Supply Chain 24 / 7 feature identifies tons of revenue opportunities that Supply Chain supports, for example enabling product customization, reducing lead time, entering new channels (e.g. online), and accelerating product launches. When board members understand these opportunities, Supply Chain will have a seat at the table – and it’s up to all of us in the field to communicate its value and make that a reality.
We certainly encourage everyone to check out the feature. There are too many great insights about the Supply Chain field in it to draw attention to in one blog post. But we’re glad to see so many practical tips from a publication that recognizes Supply Chain is about to have its day in the sun.
We think it’s about time as well.