March 25, 2017

The Chief Supply-Chain-Management Officer - The New COO

The Chief Supply-Chain-Management Officer

Supply-chain management as an activity started only two decades ago. It started as a hotch-potch of a handful of disciplines that were not systematically linked.  However, in global companies,  separately handling the different aspects of SCM components, such as purchasing and warehousing, started to become expensive and ineffective. The challenge of cost reduction resulted in the rise of strategic sourcing and collaborative relationships with suppliers. CEOs thus looked for SCMOs who knew how to achieve cost efficiencies and possessed operational and outsourcing expertise. The relationships with the suppliers and distributors led to a chain development in real sense. Today, supply-chain management process links the chain  end to end: Planning, procurement, manufacturing/operations, and logistics are planned  together to devise economical solutions. The SCMO is expected to know all four functions thoroughly. He should be able to plan and to create an environment in which the multiple functions share knowledge and work together smoothly.

Sustainability is rapidly becoming an important concern  for executives who manage this function. Companies are finding that they can create and execute sustainability strategies throughout their supply chains, from suppliers to customers. So more and more SCMOs are being asked by their boards and CEOs to take up sustainability.

SCMOs will continue to pursue low costs  either through strategic or diverse sourcing, both onshore and off. They will need to manage long-distance logistics and transportation, taking into account unpredictable external factors that could have a major impact on costs, such as political instability or the price of oil. SCMOs will have to be technologically savvy and partner with CIOs to invent new ways for their companies to interact with customers and suppliers,

SCMOs will need to be big-picture thinkers who can participate in strategic and operational decisions at the highest level, in the C-Suite Conference Room. Since SCMOs will be active and equal members of the executive team, experience in running a business unit, managing a P&L, and interacting with customers will serve them well.

SCMOs will need experience in organizational design, which is a core management function. International experience will grow more critical in the job,  as global supply chains become more commonplace.

SCMOs will need to understand emerging markets and be ready to develop innovative solutions as some of the current solutions in the developed markets may not work in emerging markets, India being an important one.
HBR March 2011 Issue

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