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Debunking Common Myths about Chief Supply Chain Officers

by | May 7, 2024 | Supply Chain

Chief Supply Chain Officers Talk Outside of Organization

Navigating Complex Global Networks Outside Your Organization’s Walls

What does a chief supply chain officer do? Seems simple enough, right? Your chief supply chain officer should take charge of your organization’s supply chain.

That is … so wrong and limiting. Unfortunately, that’s what so many chief supply chain officers worry about – ONLY their organization’s supply chain.

And they handle different aspects at different organizations. Some manage distribution. Others logistics. Others are in charge of procurement.

So, saying you have a CSCO is kind of like saying your daughter met a nice guy – a chef.

Well, is he a chef at the Waffle House or a chef at La Belle Époque? Does he make $45,000 a year or $165,000 a year? Or does he own his own chain and pull in $1.6 million annually?

Each chef and each CSCO do different things. For CSCOs, a lot of that disconnect comes because the C-suite still does not speak supply chain.

What Does a CSCO Do?

True chief supply chain officers spend most of their time looking outside their organization, not inside. CSCOs should be responsible for visibility, connectivity, insightfulness and actionability.

In other words, in addition to heading your organization’s internal supply chain, CSCOs take charge of your external supply chain. And your complete end-to-end supply chain (internal and external) likely encompasses the entire globe.

So, your chief supply chain officers have almost no need for an office inside your building. CSCOs should spend 80% of their work talking to people outside your organization’s four walls. That means suppliers, customers, transportation providers, 3PLs, vendors and other operational personnel.

CSCOs need to talk to people in China, Charleston, Atlanta, the Dominican Republic, Europe, Africa, South America, Mexico, all over the world.

Supply chain disruptions happen across the globe. The people who live on 123 Main St. cannot help your surf through those disruptions. Your problems, like your supply chains, are distributed across the globe.

What Is an End-to-End Supply Chain?

The broad geography of a complete end-to-end supply chain involves everything that goes into the goods you provide. The E2E supply chain encompasses all aspects of value creation. It’s every process and activity that creates and delivers products.

This includes initial sourcing of raw materials, components and parts to final delivery to end consumers. The E2E supply chain encompasses all stages of each product’s lifecycle – production, handling, storage, transportation and customer service. And that can involve dozens or hundreds of organizations and thousands of hand-offs.

With today’s business focus on environmental sustainability, many E2E supply chains must expand. They ought to include reverse logistics and the circular economy. Both are additional omnichannels.

Note, of course, the plural “supply chains.” Too many managers and leaders – even supply chain leaders – think their company has one supply chain.

No, each of your product offerings has a different supply chain. Each has different inputs, different routings, different challenges and different opportunities.

That adds up to a wealth of complexity and an abundance of potential problems. Problems that can crop up 47 links upstream or 117 links downstream from your organization’s spot on your supply chains.

This puts your chief supply chain officers in difficult positions. Your systems might offer enough visibility to discover a problem and the insightfulness to foresee potential problems. But without real-time autonomous resilience and effective risk mitigation, disruptions constantly overwhelm chief supply chain officers and their systems.

(The answer to that? Digital supply chain networks, as I have explained extensively.)

Supply Chain Processes – They’re Mega!

Digital supply chain networks are the only way CSCOs can manage the six E2E supply chain mega-processes. Those mega-processes – PLAN, BUY, MAKE, MOVE, DISTRIBUTE and SELL – are interconnected and cross organizational boundaries:

  1. PLAN: Strategic and tactical planning necessary to make sure supply meets your future customer demands for goods or services. This encompasses demand forecasting, supply planning and short-term and long-term capacity planning. The objective is optimal resource allocation and synchronizing supply with demand for operational efficiency.
  2. BUY: Procuring the raw materials, goods and services. This includes selecting suppliers, negotiating contracts, managing relationships, ensuring quality, cost-effectiveness and reducing lead times. In other words, all aspects of sourcing and procurement while maintaining optionality in sourcing.
  3. MAKE: All activities that convert raw materials into finished goods. It includes manufacturing, assembling and quality control. The MAKE process must be efficient, scalable and flexible enough to respond to varying production demands.
  4. MOVE: Transporting raw materials to the manufacturer, finished goods to the market and all moves in between. This includes logistics activities like warehousing, distribution, order fulfillment and transportation management. MOVE is crucial for reducing costs and ensuring on-time delivery of products.
  5. DISTRIBUTE: Distribution refers to the overall process of delivering the final product to end customers. This can involve multiple distribution channels, such as retail locations, online platforms, or direct delivery. You must align your distribution process with consumer demand and company strategy.
  6. SELL: Transferring ownership of goods from the company to the customer. This includes servicing the product while in use and afterward. SELL involves marketing, sales tactics and customer relationship management. You must understand customer needs and preferences. Then you must provide value that meets or exceeds customer expectations.

All mega-processes are crucial for achieving competitive advantage and satisfying customers in today’s global market.

Supply Chain Disruptions Spill Across Functions … and the Globe

Problems crop up anywhere along the six mega-processes.

Say you’re a global electronics company. You need solid supplies of tantalum to manufacture smartphones. According to the United States Geological Survey, smartphone capacitors need tantalum to regulate voltage and improve audio quality.

China, the world’s fifth-largest supplier of tantalum, adds to the current trade wars by restricting tantalum exports. (The Chinese government has made several similar moves in the past few years.)

China actually supplies tantalum to several of your downstream processors, well before the capacitors even enter your organization. Those capacitor manufacturers lose production. You lose capacitor supply. Your smartphone production cannot keep up with demand.

All because immediate issues overwhelmed your CSCO and supply chain systems. Or perhaps because your CSCO focused on process optimization or inventory management – something your chief operations officer should tackle.

Knowing the criticality of tantalum, your chief supply chain officer’s insightfulness should have led to seeking alternate sources. Perhaps in one of the other major tantalum mining countries, like the Democratic Republic of Congo, Rwanda or Brazil.

It takes more than data analytics and supply chain technologies to alleviate trade wars, shooting wars or natural disasters.

Supply Chain Resilience, the Difference between Success and Disaster

Without alternate supplies of key components, your organization could face disaster.

Sound farfetched?

Well, decades ago, a factory fire damaged a New Mexico radio frequency chip manufacturing plant. The Spider’s Strategy: Creating Networks to Avert Crisis, Create Change and Really Get Ahead details how two competitors reacted to the loss of a key supplier.

Ericsson reacted slowly. The company did not comprehend the gravity of the situation. Author Amit S. Mukherjee detailed divisional annual losses of $1.68 billion, a 3% loss of market share and corporate operating losses of $167 million.

Mukherjee tells a different story about Nokia. That company had spent five years building the capabilities to adapt rapidly to disruptions in its business plans.

Nokia pivoted and worked with Philips to develop alternatives. Nokia redesigned chips so other plants could produce them. And Nokia had two current, alternative suppliers who could increase production to take pressure off Philips.

Build Networks that Move Beyond Oversight into Insightfulness

The role of a chief supply chain officer is far more expansive and critical than often perceived.

To the uninitiated, the title suggests a focus on internal logistics and operations. But in truth, supply chain planning and supply chain operations must involve a global and strategic outlook. CSCOs must deal with complexities that extend far beyond the confines of their own organization’s walls.

They are not just managing the flow of goods. For true competitive advantage, CSCOs must shape resilient and adaptable business models in the face of global disruption and shifts in supply and demand.

Effective CSCOs recognize that their role encompasses not just oversight but insightfulness. They must identify potential risks and opportunities in the global supply chain landscape. CSCO’s must influence strategic planning teams across multiple organizations. They must develop optionality for their entire end-to-end supply chain, moving away from single-source systems.

The right CSCO will not just engage in supply chain management. They will increase supply chain resiliency, craft networks that sustain businesses and increase profitable growth across the globe.

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