Supply chain leaders need to understand how to translate chief executives’ increasing focus on operational improvements to the supply chain organisation, according to research.
A study by Gartner found that chief executives are still mostly concerned with business growth but are focussing more on areas that have direct implications for a company’s ability to grow profitably, such as operations improvements and workforce.
It concluded the chief supply chain officer’s (CSCO) role is ‘bimodal’, encompassing both growth partner and operational caretaker roles.
Gartner’s 2015 CEO and Senior Executive Survey examined the main initiatives and challenges of leaders across six global regions and a range of industries, including supply chain-intensive industries such as manufacturing, retail, healthcare and natural resources.
“As the CEO’s number one focus continues to be growth, CSCOs’ continued vigilance on operational risk and cost profiles is also a necessity,” said Michael Dominy, research vice president at Gartner. “We continue to take the position that ‘bimodal’ – the ability to balance efficiency and cost takeout with growth-supporting capabilities – is the default orientation for successful CSCOs.”
“Now that the CEO has returned to a more balanced orientation, the need is greater than ever for the CSCO to be an active player in the profitable growth discussion.”
Gartner’s research concluded that for supply chain leaders to be successful, they must understand CEO priorities and motivations, and translate these into implications for the broader supply chain organisation.
CSCOs must also keep up with technology to remain relevant as CEOs’ focus on technology investment includes supply chain optimisation and product cost.
They are taking a more balanced view between growth and cost and supply chain leadership should also reflect this focus on margin rather than cost savings, Gartner added. The company said that supply chain leaders and other executives in industries that rely on effective supply chain management should recognise their interdependence.
“For example, changes to customer experience management, the number one priority investment, must be translated into action by supply chain and operations to deliver benefit,” said Dana Stiffler, research vice president at Gartner. “Likewise, digital marketing initiatives in supply chain-dependent industries will underperform if they are not coordinated with supply chain.”
Talent and skills again topped the constraints list for CEOs and workforce was twice as important to respondents this year, the research showed.
Gartner said this should help supply chain leaders’ business case for investment in supply chain talent.