Source: Harvard Business Review, To Build Resilience, CEOs Need to Become Supply-Chain Experts by J. Yo-Jud Cheng and Dwaipayan Roy, September 12, 2024 (HBR.org)
The Harvard Business Review article explores how supply chain expertise is becoming essential for CEOs in the face of growing global disruptions. Events like the Covid-19 pandemic, geopolitical tensions, and environmental challenges have underscored the need for supply chains to be more resilient and agile. CEOs with supply chain management (SCM) experience are emerging as leaders who can proactively mitigate risks and capitalize on opportunities.
The Case for Supply Chain Expertise in Leadership
An analysis of S&P 500 CEOs reveals a steady rise in leaders with high-level SCM experience. These leaders, such as Tim Cook of Apple and Mary Barra of General Motors, bring unique operational insights and a proactive approach to managing supply chain risks. During crises, firms led by such CEOs outperformed peers, maintaining profitability while managing costs and boosting sales.
Key takeaways from the article include:
- Proactive Risk Management: CEOs with SCM experience are better equipped to detect emerging risks and pivot quickly to mitigate disruptions. For example, Hanes Brands pivoted to produce PPE during Covid-19 under a supply chain-savvy CEO.
- Financial Resilience: Companies led by these CEOs often avoid trade-offs like higher costs or lower sales that others face during disruptions.
- Strategic Focus: Leaders with SCM backgrounds elevate the importance of supplier diversification, logistics, and production optimization in their corporate strategies.
SCOR Framework: A Blueprint for Resilience
The SCOR (Supply Chain Operations Reference) model provides a structured approach to building resilient supply chains, emphasizing best practices across Plan, Source, Make, Deliver, and Return processes. Many companies leverage SCOR best practices to proactively strengthen their supply chains:
- Plan: WW Grainger implemented alternative sourcing strategies to mitigate supplier concentration risks, aligning with SCOR’s focus on risk-based planning and building redundancy.
- Source: Gap Inc. executed an end-to-end supply chain transformation to increase speed to market, cut costs, and reduce waste. This reflects SCOR’s best practices in optimizing supplier relationships and sourcing flexibility.
- Deliver: O’Reilly Auto Parts designed a supply chain capable of frequent replenishment, enhancing customer service by keeping stores well-stocked. This mirrors SCOR’s emphasis on agile delivery processes.
Building Resilience Through SCOR Practices
At Supply Chain Planning.ie, we regularly highlight SCOR-based strategies for building resilience:
- Mapping Supply Chain Risks: Following SCOR’s “Plan” process, we help companies identify vulnerabilities and develop contingency plans.
- Leveraging Technology: Incorporating SCOR’s recommendations for advanced analytics and visibility tools enables real-time monitoring and quicker responses.
- Embedding Sustainability: By aligning with SCOR practices in sourcing and return processes, companies can ensure long-term resilience and ESG compliance.
For example, a client in the retail industry reduced their planning cycle from months to weeks using SCOR-based analytics. This shift allowed them to respond to demand fluctuations faster, avoid stockouts, and capitalize on market opportunities.
Lessons for CEOs and Organizations
To build resilient supply chains, CEOs need to:
- Understand SCM as a Strategic Function: Treating supply chain operations as a driver of growth rather than a cost center.
- Adopt Best Practices: Embrace frameworks like SCOR to standardize, optimize, and innovate.
- Invest in Leadership Development: Encourage SCM exposure among future leaders through rotational programs and stretch assignments.
As recent global events have shown, resilient supply chains are critical to long-term business success. Leveraging SCOR principles and prioritizing SCM expertise at the leadership level can help businesses navigate disruptions and achieve sustainable growth.
For insights into building resilient supply chains and leveraging the SCOR model, explore our training programs and workshops at Supply Chain Planning.ie.
