At a recent conference, I was asked how to deal with corporate power dynamics when supply chain is not an equal-partner organisation. This made me think: “What superpowers would supply chain executives love to have?”
Data we’ve collected in our annual Chief Supply Chain Officer (CSCO) study since 2011 shows that, by a slim margin, the majority of supply chain organisations say that the CEO recognizes them as an equal partner in corporate strategy to other functions like sales, marketing and product development.
Supply chain’s role in corporate strategy is to deliver the “how” of the strategic vision. Revenue growth, market expansion, cost reduction and improved customer service targets are all a direct result of the physical supply chain network. The key for those who have reached equal-partner status – and stay there – is knowing how to adapt supply chain’s value proposition through different power dynamics at each phase of the journey.
So what superhero powers are right for you right now?
1. THE POWER OF PAIN RELIEF. If your supply chain organisation feels largely relegated to basements and backrooms, out of sight from the rest of the business, you likely find it impossible to have a collaborative strategy conversation with key leaders. For service functions and cost centers, the first priority should be getting your business partners to recognize that you can do more than just buy stuff and move trucks around.
Supply chain can be a business’s biggest problem solver. The Power of Pain Relief is demonstrated when supply chain can solve a perennial business headache. It is typical expressed through a single initiative that can later be held up as an example of supply chain adding more value than just cost reduction.
Fashion and fragrance company Puig was able to do this by addressing historically poor service-level performance by implementing an order-flow control tower. The team increased service level over 20% by unleashing the Power of Pain Relief.
2. THE POWER OF YES. Enablers of strategy are trusted by the rest of the business with key responsibilities, but are often told what to do rather than asked. To flip the conversation, supply chain executives need to be able to present scenarios and options back to the business. By speaking in terms of trade-offs, where cost, speed and service are a portfolio of levers, they engage the business to present what problem it is trying to solve rather than just give directives.
The Power of Yes is activated when a supply chain executive can say “Yes, but…”. You’re told a customer wants same-day service? Yes, we can do it, but here is the trade-off on extra inventory and transportation cost. Intel’s initiative “Just say yes” is a prime example of using trade-off analytics to move from an enabler to an equal-partner role.
3. THE POWER OF PROFIT. The challenge for many supply chain executives is that they have good ideas, but don’t have an audience to share them with. A phased climbing of the ladder to equal partner provides a guide on how to position supply chain across the journey. Once you’ve grabbed that coveted seat at the C-level strategy table, it’s now time to be a business leader, not just a supply chain leader.
Ultimately, the Power of Profit is about creating business value by developing new solutions without trying to make the rest of the business supply chain experts. Some supply chain executives make the mistake of focusing on explaining the complexities of the supply chain, rather than pinpointing trade-off decisions. Internal business partners don’t need to – nor often want to – know the details of supply chain constraints. They just want answers.
Beth Ford, CSCO at Land O’Lakes, put it best when she posed the question, “are you an order taker or are you a value creator?”. The Power of Profit will be supply chain’s superpower that ensures our longevity as an equal partner in corporate strategy.
Regardless of where you are in the journey, you need a compelling message back to the business. The CSCO study 2014 data gives us guidance.
Customer centricity works as a compelling business theme at every level. And, as shown in the data below, equal-partner organisations are the most bullish on supply chain’s role in delivering high service to customers.
When asked how her organisation was able to break down power dynamics’ barriers to drive a large-scale transformation which has delivered over €340 m in savings, CSCO of Schneider Electric Annette Clayton said, “We always had to make it about the customer. We are three years into our supply chain transformation journey focused solely on our customers. Our customers are winning.”
Customer centricity needs to be a weapon in every supply chain executive’s utility belt. Turning customer focus from an idea to something practical is often achieved with metrics. Find the links between supply chain metrics – cycle time, inventory, service level, etc. – and business value metrics – revenue growth, profitability, customer loyalty, etc. – and you will be your organisation’s superhero.
This article was originally published by Matt Davis on LinkedIn.
About Matt Davis
Matt leads the customer centricity, digital demand, omnichannel and sustainability content streams. By combining insights from the 20,000+ practitioners in the SCM World community with in-depth quantitative and qualitative research, he facilitates accelerated learning of the foundational and cutting-edge best practices in these four areas. Prior to joining SCM World, Matt was a Research Director at Gartner and the lead analyst for supply chain strategy, digital innovation and segmentation.