Chief Supply Chain Officers Help Everybody Win

Tales of Soda, Chocolate Chip Cookies and Salad Dressing

Chief Supply Chain Officers should act like Ivan Fernández Anaya and sometimes help others win.

What? Isn’t “winning for your team” the name of the supply chain and business game?

Well, yes. But in your end-to-end supply chain, you boost your responsiveness, resiliency and adaptability by helping partners win. Not by punishing them. Remember, you’re all part of the same end-to-end supply chain team.

My career abounds with examples where links solved problems far beyond their organization’s four walls. Such moves reduced costs long term. They increased resiliency. They gained competitive advantage.

From soda bottles to cookies to salad dressing, everybody won.

That’s why Chief Supply Chain Officers should spend most of their time engaging with external stakeholders to solve problems and create opportunities.

But first, remember Ivan Fernández Anaya. The Spanish runner did not take advantage of a competitor’s confusion to secure a cheap victory.

CSCO’s Guide to a Changing World

When Second Place Secures Immortality

On Dec. 2, 2012, Fernández Anaya was a distant second in a cross-country race in northern Spain. Then he noticed that Kenya’s Abel Mutai pulled up short.

Mutai, confused, thought he had crossed the finish line and won the race.

This was Fernández Anaya’s chance. He could race past Mutai, finish first and perhaps earn a spot on the Spanish team for the European championships.

Instead, Fernández Anaya guided the confused Mutai in the right direction, toward the finish line.

“I didn’t deserve to win it,” Fernández Anaya told the Spanish newspaper El Pais. “He created a gap that I couldn’t have closed if he hadn’t made a mistake. As soon as I saw he was stopping, I knew I wasn’t going to pass him. … “I have earned more of a name having done what I did than if I had won.”

That is so true. If Fernández Anaya had won, the cross-country footrace in Navarre, Spain, likely would have been a footnote in history. Bloggers, educators and the Archdiocese of Dublin wouldn’t be discussing the subject years later.

Fernández Anaya said such a victory would be without honor and would disappoint his mother. He also dreams of living in a world where everybody pushes and helps each other to win.

That, in a nutshell, is what your CSCO should do.

What Is a CSCO? Definitely Not a COO …

A CSCO should regularly talk to suppliers, customers, transportation providers and vendors. Chief Supply Chain Officers must maintain visibility, connectivity and insightfulness into potential disruptions and actionable solutions.

Rather than being office-bound, CSCOs need a global perspective. They must interact with operational personnel worldwide to proactively manage the end-to-end internal and external supply chain.

That means the entire world is their oyster, their responsibility and their office.

Your Chief Operating Officer, on the other hand, takes care of internal operations, as I have pointed out.

Supply Chain Cost-Cutting Via E2E Collaboration

I was consulting for a plastic bottle maker that had a large contract with a soda company.

The manufacturer sent the bottles to the soda factory. The soda factory threw away the boxes the bottles came in and used a different set of boxes to ship out the full bottles.

The supply chain was buying two sets of boxes – one to ship the bottles to the factory, one to ship the product to retailers.

That’s classic waste that eats into your bottom line.

I asked managers at the bottle maker if the soda factory could just reuse the original boxes. They did not think the soda factory would be interested. Then I asked if I could talk to the soda maker. Permission granted, I presented my plan.

Leadership at the soda maker thought the idea was brilliant. As long as the boxes could support the full weight of the soda-filled bottles and not damage the product in transit.

Ensuring that was much cheaper and less wasteful than using two separate sets of boxes. The soda factory also saved by not having to pay to dispose of the original inbound boxes.

Both sides renegotiated their contract. The bottle maker made more margin and the soda maker reduced costs overall.

Everybody won by cooperating in the end-to-end supply chain, not by trying to beat a little more money out of their partners.

Eliminating Supply Chain Risk with Taste

The chocolate chip cookie example involves looking all the way from manufacturing into the mouth of the final end customer.

A grocery store’s manufacturer had developed a process where 53% of the cookie’s weight was chocolate. A truly decadent and delicious cookie.

Unfortunately, it was truly a breakable cookie. Turns out, a cookie with that much chocolate crumbles easily.

In fact, 30% of the cookies broke or crumbled before they got to the customers’ homes – many supply chain links downstream. An efficient supply chain does not deliver crumbled cookies In every package.

New packaging that gave each cookie its own slot helped. But that also skyrocketed costs. Finally, somebody suggested slightly reducing the chocolate content. Tests show that reducing the chocolate content to 47% made a major difference in each cookie’s “survivability.”

The cookies were in great shape when the customer opened the box. If you cannot get your product to the customer, your supply chain responsiveness is nil.

Face it, few people can tell the difference between 47% chocolate and 53%. It still tasted delicious and indulgent. I want one right now just writing about it.

So, now supply chain operations could transport those cookies from the manufacturer to the distribution center to the retailer’s distribution center to the retailer to the back room of the stores to the floor of the stores to the checkout counter to the customer’s car to the customer’s residence … and then into the customer’s mouth.

That’s a mouthful. But so is your end-to-end supply chain. And so are those decadent cookies.

The Right Box Solidifies Supply Chain Resilience

In the salad dressing example, the manufacturer also had major issues with damage. Like in the chocolate chip cookie example, the supply chain disruption didn’t happen during manufacturing.

The disruption didn’t even happen along the supply chain network. It didn’t happen during shipment to the manufacturer’s warehouse. Or while in transport to the retailer’s warehouse or stores. Or while store clerks unloaded the trucks and stored the salad dressing in the back room.

Instead, the problem happened on the store floor, when stock clerks used box cutters or knives to cut the top off of boxes. And occasionally puncture bottles in the process. Sometimes small punctures took a while to leak, and stores complained about salad dressing all over their shelves.

This time, the salad dressing maker redesigned the box. Now, stock clerks can pull a tab, open the box and stock the shelves. No sharp blades, no damage.

Once again, this was technically not the manufacturer’s problem. The salad dressing maker could have washed their hands of the problem. They could have said, “Your store managers just need to train your stock clerks better.”

Instead, this insightful leadership team invested in meeting customer requirements several steps downstream. After all, true supply chain resiliency means retail shelves with products to offer.

Damage rates plummeted. Retail stores were happier. Sales increased.

Yes, the pull-top box was more expensive. But in the end, the expense and the trouble were worth it.

CSCO’s Guide to a Changing World

Supply Chain Leaders Should Do the Right Thing

So for your Chief Supply Chain Officers – and your organization as a whole – the objective is not to beat your suppliers.

The objective is to do the right thing. Then, customers can get your products and services when they want and where they want. That’s matching supply and demand in a way that your entire global supply chain will win.

That goes for soda, chocolate chip cookies and salad dressing. And yes, cross-country racing.

Back in 2012, Mutai won the race in Spain. But Fernández Anaya won as a man for doing the right thing. And he is still remembered.