Today we wanted to highlight a great article and weigh in on its implications. The article, entitled “How Strategic Is Your Supply Chain?”, was written by Shawn Casemore and appeared in CFO magazine, an unusual location for a Supply Chain-focused article. But it speaks to the function’s rising prominence that a publication aimed at an audience of Chief Financial Officers would publish a major article about Supply Chain – with the goal of getting CFOs thinking about their Supply Chains and what they can deliver to organizations.
The basic premise of the article is that Supply Chain Management has seen a huge rise in prominence in business over the past two decades, alongside other functional areas such as digital marketing. But along with this prominence has come the perception that Supply Chain’s greatest value is in cost reduction and cost reduction only.
In Casemore’s words: “we’ve fallen prey to the belief that reducing costs and managing risk are the single greatest contributors of value from the supply chain. Just ask anyone in a supply chain role, executive or otherwise, about the value they contribute to the organizations and you’ll find that reducing costs while minimizing risk is at the top of the list.”
The article goes on to discuss how this type of thinking – that Supply Chain only serves to lower cost – ends up leaving value on the table for organizations. He discusses how this type of thinking also doesn’t serve Supply Chain leaders, who end up becoming less strategic and innovative, turning away suppliers who offer innovation and new ideas because of tactical cost concerns.
To quote Casemore once again: “at most of the organizations I work with, supply chain professionals are seeing themselves as gatekeepers. They turn away suppliers that offer new ideas, new products, and supportive technologies for cost reasons.”
We wanted to highlight this perspective because it squares with what we’ve been hearing in our conversations with senior business leaders (such as “CPO Emeritus” Jack Miles) about how Procurement and Supply Chain Professionals sell themselves short if they only talk about what they save.
In fact, the true, next-level benefit that the discipline can provide companies, (especially when those companies’ leaders give it oversight over aspects of business strategy), isn’t cost savings.
Supply Chain leaders are able to offer a holistic picture of an organization’s business because Supply Chain touches on every aspect of getting a product (or service) to market. But more important than that, in an economy of increasingly complex supplier relationships, Supply Chain is also in a unique position to think big picture about how to work with external suppliers to gain a strategic edge over competitors, introduce innovative products or processes, and deliver organizational change and renewal.
But Supply Chain leaders aren’t able to do this if they’re mired in the tactical, day-to-day considerations of getting the right product to the right place at the right time. That’s certainly a part of Supply Chain’s job, and it always will be, but organizations (and professionals within the discipline) are leaving so much on the table by thinking of Supply Chain only through that lens.
As Mr. Casemore says in his description of how CFOs can help companies get past this phenomenon: “The greatest value you can obtain from a Supply Chain team will come from involving its leaders in the formulation of corporate strategy.”
We couldn’t agree more with what Casemore argues: that CFOs and other executives need to do as much as possible to expose Supply Chain to corporate strategy and high-level decision-making and give them the opportunity to work with external suppliers for innovation and the kind of big ideas that ultimately push companies to the next level.
Forgive us if we seem to be harping on the topic of Supply Chain’s increasing prominence, what with our recent posts about the rise of the Supply Chain CEO and Chief Supply Chain Officers. But we can’t help but be excited about how the wider business world is waking up to Supply Chain’s strategic potential. And, as a boutique recruiter in Supply Chain, we’re proud to advocate for the discipline’s importance and potential in business whenever we can.
Have you signed up for Argentus’ Market Watch Newsletter? It only takes a moment. You’ll receive low-volume, high-impact market insights from the top specialty Supply Chain recruiters including: Salary Information, Supply Chain industry trends, Market Intelligence, Personal Branding tips and More!