Chief supply chain officers (CSCOs) must expand their focus beyond cost management or accept a relegated role within the enterprise, according to Gartner.
“Stakeholders perceive that the worst of the supply chain crisis has receded, and CSCOs now face the prospect of being allocated fewer resources with the expectation of returning to a role more confined within the enterprise,” says Tom Enright, vice-president analyst in Gartner’s Supply Chain practice.
“CSCOs’ own priorities centered on cost management may be contributing to a loss of influence, as their CEOs remain steadfastly focused this year on driving growth.”
For the supply chain function to retain influence in a “post-crisis” state, CSCOs must deliver multi-value contributions where their investments create maximum impact across key priorities that include growth, resilience, sustainability, risk reduction, and other priorities, while also addressing cost.
To accomplish this, Enright outlines a three-part framework for CSCOs to follow:
Define Focus Areas and Limits
CSCOs must chart a course between a narrow focus on cost reduction and a “do-it-all” approach that is destined to failure as resources dwindle and employee fatigue mounts from years of disruptions.
Expectations should be set for each commercial segment, product group and physical network on where the team will focus on adding value and areas that will be intentionally de-emphasised.
“Being able to confidently define what a CSCO will say ‘no’ to is equally important to stating their priorities for each team,” says Enright. “This can only be done confidently after clarifying the risks and gaining internal and external buy-in. Once accomplished, this provides a clear basis for allocating resources in line with carefully considered principles.”
Build a Multi-Role Supply Chain Organization
A focus on delivering multiple sources of value requires a rethink of organisational roles to support this objective.
Previously, organisational design revolved around the concepts of centralization or decentralization, a framework that lacked nuance.
Instead, Gartner recommends organizations consider which activities need to be integrated at the enterprise level and which should be differentiated at the business unit or segment level – both for operational and design activities.
“Expanding the number of organizational approaches allows a greater level of flexibility in delivering multiple sources of value simultaneously,” says Enright. “It also allows the agility to change over time as business needs evolve.”
Identify and Deliver Multi-Value Plays
Rather than focus solely on cost reductions, CSCOs should instead identify the investments that allow them to achieve multiple objectives within one initiative.
Enright notes that many organisations are finding synergies with initiatives that combine sustainability and cost objectives, while others are investing in new technologies to improve customer experience, enhance their employee value proposition and drive growth.
“While the supply chain function is most often delegated cost management responsibilities, it is indispensable for delivering other important forms of value,” says Enright. “It is up to supply chain leaders to identify and prioritize those investments that will deliver simultaneous sources of value, in line with their team’s strengths and stated priorities.”