How to evaluate Supply Chain Leadership level
Supply chain management (SCM) has become a complex, technology-driven discipline that reaches across functions, business processes, and corporate boundaries. Nevertheless, some CEOs pay little attention to SCM as a strategic concern and thereby squander its potential to improve overall performance.
Executed well by experienced professionals, SCM can deliver significant, tangible benefits in the form of reduced working-capital investment, faster inventory turns, lower fixed costs, and greater return on assets.
Broad application of SCM principles can minimize cross-functional conflicts, which so often exemplify the law of unintended consequences. Therefore, SCM strategy should inform business planning, performance metrics, and incentive and commission structures.
SCM merits direct CEO involvement, particularly in companies that compete in supply chain–intensive industries. CEOs should evaluate their own level of supply chain leadership.
– Is supply chain leadership a valued career path in your company?
– Do you have a program of customer-focused metrics and best practice benchmarking that drives cross-functional alignment?
– Do employee and customer behaviour reflect your supply chain strategies? Are the strategies clearly articulated? Are strong reward and incentive plans in place?
– Do you understand important supply chain technologies and IT-powered trends?
– Do you play a constructive role in resolving cross- functional disjunctions, including those that influence the ability to sell inventory at market price?
– Do you demand that supply chain expertise be factored into business initiatives and planning, promotional programs, and customer- contract discussions?
– Do you ensure that short- term thinking doesn’t sabotage supply chain management strategies and opportunities?
As long as supply chain management remains a black box to the CEO, so too will a supply chain leader’s possible deficiencies.
Credit: HBR, Sep 2007