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Both Are Critical, but CSCOs Must Face External Realities

My blog about how boards of directors have tabled, but not enabled, chief supply chain officers generated a lot of feedback.

Some questioned the need for a CSCO. This enhances my point: Companies still misunderstand the importance of chief supply chain officers (CSCOs).

Take this comment: “Jim, I challenge the assertion that CSCOs are a good thing. What is the role of the COO (chief operating officer)? The supply chain should be the highest priority of the COO.”

My response? The COO looks inside the organization. The CSCO looks outside the organization.

Again, today’s CSCOs are in the boardroom. But they need to be part of the conversation.

CSCOs – Chiefs of the Supply Chain Ecosystem

CSCOs and COOs operate in different but complementary arenas.

The operative words here are ecosystem and internal operations. CSCOs take care of an entire ecosystem outside their company. COOs take care of that company’s internal operations.

Let’s use me as an analogy. I can take care of myself – internal operations. But I also have an ecosystem based on family, friends and business.

My ecosystem includes my wife, children, grandchildren, brother, nephews, nieces, Tompkins Ventures employees and Business Partners.

Likewise, the CSCO’s ecosystem involves developing, implementing and managing strategies and tactics for the company’s supply chain operations. These operations include sourcing, procuring, planning and distributing products and services.

A lot of those activities – your end-to-end supply chain – take place outside your company’s four walls.

What Is Your End-To-End Supply Chain?

Your end-to-end supply chain starts with raw materials. It does not matter that those raw materials enter your supply chain 37 links upstream.

Your end-to-end supply chain ends when that product or service reaches the end customer. Again, it does not matter that a final mile delivery company 18 steps downstream delivered the end product.

The CSCO’s Strategic Role

Yes, CSCOs have operational responsibility to improve supply chain processes. Yes, this should include adding optionality to routine procedures and automating repetitive manual work.

But their main strategic focus is bridging those siloed systems across the hundreds or thousands of entities that make up your end-to-end supply chain. Your CSCO must anticipate, mitigate and manage disruptions. A task all the more important in an age of perpetual disruption.

Their strategic role touches all components of the business. These include procuring raw materials, purchasing and sourcing components, logistics, legal, manufacturing, finance and product development.

Sure, my supply chain is simpler if I source parts from Durham, N.C., and ship them to my factory in Raleigh, N.C. It’s far more complex to source parts in Southeast Asia, manufacture in Brazil and ship to the United States.

Those choices affect how CSCOs handle transportation, inventory, customs, warehousing, everything.

The CSCO also needs domain knowledge of tools and systems. They play a key role when your business buys and integrates new technology. After all, this technology is key to coordinating data use and cross-functional collaboration – within and outside of your organization.

Preferably, that technology includes the move toward digital supply chains. That is the only way to do global supply chain management right.

In essence, the CSCO drives cost savings, operational efficiency and profitable revenue growth.

Where the COO Comes In

The COO is equally important. They oversee day-to-day administrative and operational functions.

At its most basic, the COO takes the material that the CSCO delivers to the factory. The COO makes sure those factories produce washing machines, smartphones, widgets, etc. The CSCO makes sure those goods get to the end customer.

Historically, COOs have worked closely with CEOs to execute the company’s vision and goals. Think of the years Apple COO Tim Cook and late CEO Steve Jobs collaborated. (Technically, Cook was first senior vice president for worldwide operations. Then he became executive vice president for worldwide sales and operations, per Wikipedia.)

Remember, Cook, like me, is a degreed industrial engineer. Therefore, he knows supply chain, so he could play dual roles.

Together, Cook and Jobs transformed Apple.

Cook came aboard in 1998. The tech giant’s stock price then was 31 cents a share. That shows the importance of having a supply chain expert on your board of directors.

Now, as CEO, I’m sure Cook keeps a close hand on Apple’s end-to-end supply chain as well as their internal operations.

COOs strive for efficient, effective internal business operations. They manage resources, analyze systems, lead teams and develop the organization. They, like CSCOs, should be involved in high-level discussions about planning, strategy and policy.

A great COO will deliver functional business operations that help drive extensive, sustainable and profitable growth.

You Can’t Have One Without the Other

If you have a great CSCO but a subpar COO, your company will not do well. And vice versa.

A great CSCO might get the materials in and the products delivered. But if the subpar COO delivers subpar products, there goes your company’s profitable growth.

Likewise, the greatest factory in the world cannot source materials and deliver finished goods to customers.

As you can see, both jobs are critically important.

Unfortunately, most boards are still listening to the COOs, the finance people, the sales team. The CSCO is at the table, sitting in the corner.

Do you want your organization to have a global supply chain that offers optionality, resiliency and the ability to withstand disruption? If so, your board of directors is going to have to enable your chief supply chain officer. I would love to talk about your path forward.

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