Strategy

Inside the Mind of the Chief Supply Chain Officer

by Peter L. O’Brien & Marieke van der Drift, Russell Reynolds Associates

The role of the chief supply chain officer, or CSCO, seems to grow in complexity and strategic relevance with each passing year—and the rich and robust capabilities of those filling the role reflect this expanding responsibility. CEOs and boards today want leaders who are fully accountable for the global end-to-end supply chain, from product innovation to product delivery.

The proliferation of digital technologies across industry sectors and regions is requiring a further expansion in the CSCO’s role, as discussed in Russell Reynolds Associates’ study Digitisation of the Supply Chain: How Ready Are You? Indeed, CSCO capabilities and responsibilities are now so important that several prominent companies have even considered tapping leaders with specific global supply chain experience for the CEO role.

Differentiators of CSCOs

The chief supply chain officer in most large organisations is no longer just a handson, tactical operator. These executives are influencing margins, time to market, and customer retention, using strategic capabilities that matter to investors. Companies now look to their supply chain leaders for growth, agility, and strategic advantage. Costs are still important, but today’s best-in-class global supply chain leaders are making strategic decisions that enable the business to expand in the most efficient way.

Given the CSCOs’ responsibilities, it is not surprising that when we examine their leading attributes relative to other executives, we find leaders who tend to be significantly more:
• Strategic and innovative: they contemplate the future, anticipate change, and think innovatively about solutions
• Inclined to act independently: they lead change and cut through bureaucracy
• Persistent and determined: they are likely to take the lead, set clear directions, and do what it takes to reach their goals

More than other executives in the management team, CSCOs also have to navigate a complex web of stakeholders, including suppliers, customers, internal colleagues, and external organisations and partners. CSCOs are very aware that they are part of a global, interconnected supply-and-demand network with profound interdependencies. They tend to have an objective and logical approach, remaining fairly formal and reserved in their interpersonal relationships. They must be calm and poised under pressure as they work to ensure the supply and delivery of goods and services, no matter the circumstances or the location around the globe.

Unique attributes which can help CSCOs flourish in a CEO role

Leading companies understand that in today’s world, how the organisation handles its global supply chain is a critical source of competitive advantage. That knowledge has broadened the CSCO’s brief. No longer focused solely on operations, the CSCO now is also concerned with strategy development, product and service innovation, and even sales.

The CSCO must both think about long-term strategy and profitable growth while at the same time making these operationally possible. The CSCO’s increased understanding of the organisation’s complex operations gives those in the role more common ground with the CEO.

The CSCO is also increasingly active on the senior management team, whether leading a business unit or geography or stepping up to a senior executive position, and even to the role of CEO. One of the primary questions we hoped to answer, therefore, was, Which CSCO attributes equip these executives to flourish in a general management role, and which behavioural facets may hold them back?

What’s next for the CSCO?

Two decades ago, we could barely conceive of one individual overseeing the entire end-to-end supply chain. In a 2004 survey of 200 Fortune 500 companies, only eight per cent had a supply chain executive on the executive team. This ratio more than doubled, jumping to 18 per cent, by 2009. Today, it is far more common for CSCOs to be seen as an integral part of the top management team. When we assessed 50 companies in selected industries listed on the 2016 Global Fortune 500, we found that 68 per cent of the organisations have someone responsible for overseeing a combination of, if not all, end-to-end supply-chain functions.

Consequently, even as the global supply chain has become an increasingly strategic matter, the challenges for CSCOs have changed:

A shift to “systems thinking” In today’s challenging global markets, it can be argued that the route to sustainable advantage lies in exploiting the strengths and competencies of various stakeholders to achieve greater responsiveness to market needs. Most organisations can no longer afford to operate in isolation. Instead, they function as part of an enormous global interconnected network. Successful CSCOs have therefore shifted to “systems thinking.” They know when and how to partner and collaborate with competitors to—ironically—gain a competitive edge. As a result, skills in relationship building and influencing are now extremely important for CSCOs. In an extended enterprise, there can be no boundaries. An ethos of integrity, trust, and commitment must prevail.

Innovation under volatility: the digitally enabled global supply chain The gap between what the global supply chain provides and what the enterprise needs is growing. Closing that gap will require a new, more agile approach to investment in technology, leadership, and talent. Recognising that fact, leaders are creating innovative digital initiatives that run alongside the traditional analog businesses. Gartner refers to this approach as the “bimodal supply chain.” Global supply chain leaders who can integrate the use of digital technology across their entire business will separate themselves from those who merely coordinate the supply chain.

Changing requirements for global supply chain leader The role of the CSCO has changed, and so have the requirements for success. While CSCOs in general are strategic and innovative thinkers, they lack some capabilities that will become increasingly important managing end-to-end supply chains in the future.

There is for example a growing need for strategic relationship builders who recognise the vast interconnectivity across global supply chains, even more so in the future.

The way forward

The next generation of global supply chain leaders will be called upon to steer the company through complexity, digitalisation, and volatility. They will need to innovate the way the company supplies existing products and services to end customers, as well as to drive growth and develop new product and service offerings. CEOs and boards of companies should proactively assess their global supply chain talent pool and think about their future pipeline in the short, medium and long term. Their global supply chain talent may well become the future CEOs of the company.

About the Authors

Peter L. O’Brien is a member of the firm’s global CEO/Board Practice and advises clients across all sectors. Peter also leads the firm’s Global Supply Chain Practice and is a member of the global Industrial and Natural Resources Sector. Peter is based in Sydney.

Marieke van der Drift is a Knowledge Consultant and leads knowledge management efforts for the Global Supply Chain Practice. Marieke is based in Singapore.

Previous ArticleNext Article