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Why Do Major Manufacturers Not Have A Chief Supply Chain Officer?

The CSCO role is seen as essential, but is often ignored

16Mar

In the recent ‘State of the Global Supply Chain Report’ by GT Nexus, 76% of the 250 US-based manufacturing executives asked said their companies don’t have a representative from the supply chain in the C-suite. A total of 32% said their company did not have a Chief Supply Chain Officer (CSC0) but did have a similar role, while just 2% said they had a CSCO proper. A further 2% said their companies did not have a CSCO at the moment, but had plans to create the position.

In total, 41% of executives who responded to the GT Nexus survey said that their companies did not have a supply chain executive position and had no intention of creating one. This implies that, despite a growing acknowledgement that supply chains can add value, many are still focused on costs and failing to make the area a business priority. This leaves them vulnerable to the risks inherent in a globally-focused and increasingly turbulent business environment. They are also missing opportunities to move into new regions and develop more cost-efficient partnerships with suppliers, leaving themselves open to competitors that can.

The modern CSCO must be a strategic relationship builder who recognizes the vast interconnectivity of global supply chains, and helps to navigate it. They have to be adept at building bridges with colleagues and vendors. In order to really drive success and move towards the supply chain value concept, organizations need a dedicated individual at executive-level who can do these, who understands the inner workings of the business, and who can work across all departments to ensure that the whole organization is working towards corporate supply chain objectives. A united approach to meeting supply chain goals is vital to supply chain excellence and innovation, and this requires co-ordination that only someone at executive level can provide. Companies that have CSCOs also indicate to suppliers, investors, employees and customers that they place a high priority on supply chain, and understand its strategic relevance, and will subsequently be more willing to meet their needs.

Another reason CSCOs are so necessary is their understanding of the technology that can help ensure cost cutting and speed up processes. Perhaps the most shocking part of the GT Nexus survey was the number of respondents who said they don’t believe their supply chain will be impacted by technology this year, with 38%. This, despite the influx of IoT and automation processes that are due to come in over the next year, indicating a lack of appropriate knowledge that will likely see them fail to exploit such technologies and fall behind their competitors.

The success of behemoths like Apple and Amazon is due as much to supply chain management as it is anything else. Increasingly, companies are seeing this and adding Chief Supply Chain Officers (CSCO’s) to their executive groups, as Fortune magazine notes, citing the emerging startups like eCommerce glasses retailer Warby Parker and defense contractor Raytheon as two to have done so. Bob Heaney, senior analyst in the supply chain management practice at Boston-based Aberdeen Group, also notes that, ‘Companies are now vesting more power and responsibility in their supply chain executives’. This may be true, but far more companies need to start giving supply chain the recognition it deserves.

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