BW 41 Supply Chain Leadership
12/16/2021

Supply Chain Leadership

One of the most pervasive tropes in the post-Covid recovery of businesses is “supply chain issues.” While this has been used in times past as an excuse for poor or delayed service, in point of fact it is a real and complex problem, a problem that offers the opportunity for a competitive edge for companies that take advantage of it.

Supply chain has traditionally been seen as the province of management, involving the design, control and monitoring of the supply chain, and management certainly is an indispensable component, but in today’s fast-moving business environment, there is a need to go beyond supply chain management to supply chain leadership.

The best supply chain executives have strong communication and relationship management skills to deal with both internal and external stakeholders. Of that group, fewer have the ability to think strategically and create value. That additional component distinguishes leadership from management. An emphasis on leadership combines centralized strategic planning with decentralized execution to provide better services and also to create a new pool of resources so that then one supplier cannot meet a need, others can be found.

Supply chain leaders, by identifying the priorities of your business strategy, will be able to organize your supply chain in a way that fits the organization’s business model. Leaders will also be in a position to communicate and relate to suppliers to avoid having the organization hold too many products at a time with concomitant increased costs and inefficiencies. A leader who is looking at the overall picture rather than one or two business units can avoid delays in information transfer both within the organization and with suppliers and customers to increase efficiencies. A supply chain leader should ideally be an expert who can examine and assess the overall supply chain management and production process.

Supply chain leaders will need to understand how to plan for customer demand with the use of data. They also need to build relationships with customers and suppliers to be able to find ways to share data to make your company’s supply chain work smoothly. The right candidate will give the company a competitive edge. A supply chain leader should be able to give customers what they want, when they want it and with awareness of operational results and economic drivers.

Entrepreneurs probably didn’t go into their businesses thinking their company was built on a supply chain. If you are bringing in a a supply chain leader, you bring somebody who is astute and you’re saying to them: create a competitive advantage. A supply chain leader understands the risk in procurement and is able to mitigate it. For example, when there is a natural disaster, the supply chain manager has already thought through contingencies and alternative sources for materials.

The Deloitte Organization surveyed more than 400 executives in manufacturing and retail across the globe and found that organizations with superior supply chain capabilities demonstrate significantly above average performance on both revenue growth and EBIT measures when compared to industry average:

  • 79 percent of organizations with superior supply chain capabilities (“supply chain leaders”) achieve revenue growth that is significantly above average
  • Only 8 percent of the organizations with lower performing supply chains (“supply chain followers”) have above-average revenue growth
  • 69 percent of supply chain leaders have an EBIT margin that is significantly above average compared to only nine percent of supply chain followers

As with most things, the key to superior supply chain capabilities lies in leadership. The job of Supply Chain Leadership does not exist – the field is squarely in the domain of management. A recruiting firm with proven expertise in finding leaders will sort out candidates and identify those who have the capacity to create this new, strategic view and move their companies into Deloitte’s top category.

 

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