December 3, 2019

Supply Chain and Logistics Strategy: Welcome to the C-Suite!

Written by Garret Weigel | Supply Chain

Over the past few decades, the supply chain market and logistics industries have gone through a makeover. It’s had a name change. It’s been recognized as a science and discipline - certainly more than in the past. And it’s risen to the forefront of many C-suites, as leadership can talk to it readily as an integral part of corporate strategy for the operations of many successful companies.


A Bullpen for the C-Suite?

Looking forward, tomorrow’s CEOs may come from the ranks of supply chain management. Recently Nader Mikhali wrote in Fortune that the next generation CEO just may come from a place not known for cultivating CEOs: the supply chain suite. When the supply chain suite becomes a fast track to the C-suite, something has changed. Mikhali presents Amazon and its remarkable supply chain DNA as a precursor to this possibility. It is a dynamic that nobody can dismiss as unimportant. So if you know a bit about supply chain, and can mimic the Amazon effect, you may have more than what it takes to succeed as a leader in the industry, now and in the future. "Because of this dynamic," she states, "CEOs of the future will disproportionately come from a traditionally under-appreciated business function: the supply chain."


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The idea is not just catching on, but supply chain managers are garnering a reputation as being effective CEOs. Wolfgang Lehmacher, head of supply chain and transport industries for the World Economic Forum in 2015, had predicted this to be the case. He points out what many may not have known - that some reputable CEOs either came from the supply chain ranks, or had gained some significant experience from it. He stated:


"Many companies seek out their CEOs from roles that are operational, such as supply chain management. A famous example, of course, is Tim Cook, CEO of Apple, who was COO before becoming CEO. He is not the only one. Alan George Lafley, CEO of Procter & Gamble, took a commission with the U.S. Navy as a supply officer first, and Mary T. Barra, CEO of General Motors, is known for her strong operations and supply chain management background."


Robust Supply Chain, Profitable Enterprise?

Successful CEOs who cut their teeth in the supply chain departments of major companies, bring insight into an area that companies are increasingly steering their investments in technology and people.


In Deloitte’s 2019 Retail Industry Outlook, they emphasize the newfound importance of the supply chain - in their report, for retail - but as an important element that where “many companies are funneling money into supply chain design, transformation, and improvements. The supply chain is quickly becoming a way to offer the consumer a differentiated service."


While there is much excitement over supply chain management and the importance of logistics in today’s rough and tumble business environment, something still seems to be missing. In spite of what appears to be a trend, there's still a paradigm shift needed. Not everyone associates supply chain experience as a prelude to the curriculum vitae of our modern-day CEO. In an article in Chief Executive magazine, authors Steven Bowen and J. Paul Dittmann laid out the case of how many are missing the boat.


"Surprisingly few companies understand the importance of the supply chain, and few have a formal strategy in place for managing global supply chain risk in the years ahead."


The tide may be changing. Beth E. Ford was recently appointed as the CEO of Land O’Lakes by their board. There are others, and will likely be more in the years to come as supply chain and logistics undergoes a changed reputation. No longer is it the back office operational department that was a road to - usually nowhere when it came to top leadership roles in the company. It now may be the opposite.


Spend some time in sales? Spend some time in finance? Now it will be “get to know the supply chain and spend some time managing it.” There's room for the supply chain to gain importance, and the momentum of its importance is building. In the future, we can expect the supply chain to find its way to the C-suite of corporations and be an integral part of the organizational strategy.


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