The term Supply Chain was coined 40 years ago by Dr. Wolfgang Partsch. Having worked with him on a range of supply chain management projects, he explained that, while changing snow chains in the Swiss alps, he had the flash insight into a supply “chain”.
Still today, though, there is no wide agreement on what supply chain management entails. Does it include logistics, purchasing and production? Should it extend up and down the production flow to suppliers and distributors? And, which organizational roles belong to Supply Chain Management?
“Supply Chain” raced to the top of the news with the recent turmoil and disruptions triggered by Covid-19, the war in Ukraine and the inflationary economy.
Recently, it became clear that the top supply chain role must be part of the executive team, as the Chief Operating Officer, or more precisely, the Chief Supply Chain Officer. What are the multi-layered competencies of the CSCO (Chief Supply Chain Officer)? There are four layers: Foundational, Process, Alignment, and Change.
1) Foundational Competencies of the CSCO
At the foundational level are the technical skills: inventory management, S&OP, MRP, scheduling, purchasing, transportation, IT systems, automation, project management, etc., etc. While a modern CSCO cannot know all the technical details, the more the better.
2) Process Competencies of the CSCO
Building on top of this basis, the CSCO must understand how to deliver results for customers, employees and the company across all functions and processes. Here a cross-functional, process-driven system perspective comes to mind, like the SCOR Model. Alas, most companies drown in siloed behavior, where everyone gets a bonus for hitting their metrics, but sadly, the customer has been forgotten.
3) Strategic Alignment Competencies of the CSCO
The next essential skill of the CSCO consists of the alignment of the supply chain with the business strategy. What is more important for competitive success: flexibility or efficiency? Reducing cost or increasing service? Investing in innovative solutions with the suppliers or pressing ahead for lower cost? Here, tough decisions need to be made because they consist of trade-offs. The supply chain cannot be everything to everyone.
4) Change Leadership Competencies of the CSCO
The aforementioned competencies are useless if they are not implemented: CHANGE. This is the most critical skill of the CSCO: working with stakeholders to commit to a course of action. This is the hardest job because there are many interests and this process needs to be led masterfully: leadership.
To bring in all these competencies is a tall order, however, the importance of the supply part for companies must be recognized. It often comprises 50% or more of the company costs and strong supplier relationships must deliver more than low purchasing prices, which are: innovative ideas, high quality, speedy delivery, risk reduction and resilience. These are competitive advantages that are sorely needed in today’s turbulent times.