Why Enterprises Need A Chief Supply Chain Officer

“Behind every great leader there was an even greater logistician.” -M. Cox

On a trip to Saudi Arabia in 1990 at the start of preparations preceding Desert Storm, the American-led military operation to take back Kuwait from invading Iraqi forces, United States Air Force General Chuck Horner was granted only one companion to accompany him.  Some thought General Horner would bring his executive officer (XO). 

General Horner chose to bring his logistician: 

“If you’re going to a war, and you can only take one person, who would you take? ”

The answer was obvious—his logistician.  There are three kinds of staff people who are never heroes, but without whom a commander is dead in wartime:  his intelligence, communications, and logistics chiefs.  He can limp along in peacetime with less than capable people in those slots, but he’s dead if there’s any weakness there when the shooting starts. There is great truth in that old adage that amateur warriors study tactics, and that professionals study logistics.”  -Tom Clancy with Gen. Chuck Horner (Ret.), Every Man A Tiger (New York: G. P. Putnam’s Sons, 1999), p. 173

American military leaders have embraced supply chain logistics as a key component to victory in any conflict.  Desert Storm was no exception and was an eye opener for future war plans.  Logistics, notably the management of military supply chains, is still part and parcel of any country’s military doctrine in the present day. 

Every American field commander has a logistics leader on his/her staff to run the day-to-day and long-term needs of their operations.  Business leaders of private organizations, particularly those who market products and merchandise, would do well to do the same via a chief supply chain officer (CSCO).

Most of us know the supply chain is typically a pretty big and complicated operation made up of several sub-departments.  It’s important there’s someone who should be in charge of it.  Not many; not a few; just one person to rule it all.  

The supply chain covers the flow of goods, services, and information through various operations and industries.  In a typical organization that markets products, the supply chain’s scope covers purchasing to manufacturing to shipping.  Included in that scope are support groups such as planning, engineering, maintenance, and quality control. 

The supply chain encompasses a variety of activities such as but not limited to materials sourcing, inventory management, quality inspection & testing, production scheduling, demand management, storage & materials handling, orders management, transportation, maintenance, and after-sales services.  Cost management from budgeting to operating expense (OPEX) and capital expenditures (CAPEX) is often within the bounds of supply chain management.  Projects especially investments in facilities involve supply chain managers.  And when it comes to discussion on topics such as product life-cycles, working capital, customer services, and organizational development, the supply chain manager would be a major participant.

Given the wide scope and the number of activities a supply chain executive’s job would entail, it comes to no surprise that some executives don’t entertain the idea of having one person managing all of an organization’s supply chain operations.  Aside from seeing it as too big for one person to handle, it would be downright difficult to find a person who would qualify with the experience and skill-set. The CSCO would have vast authority over practically most, if not all, of an organization’s core operations.  This is perceived as power that business leaders fear could be abused.

But even in very large organizations, such as the military branches of the United States armed forces, it makes sense to have one person running an organization’s entire supply chain.

The supply chain works best with a focused purpose and strategy.  Whereas departments such as Finance, Sales, Marketing, Research & Development (R&D), and Human Resources have their specific supporting missions, so does the supply chain. 

The supply chain’s role is to fulfil demand at the best value and best returns in investment for the organization’s stakeholders.  In whatever way this purpose may be framed, the supply chain’s operations have a single end: fulfil demand.  And one person should be on top of it, in leading it, and making sure it gets done. 

Having one leader also gives recognition to the uniqueness of functions and the importance of contributions from each of those functions.  With a united department under one executive, what each function does rises in importance in the overall organization.  The function of a warehouse, for instance, would receive more recognition in how long items are stored and the costs that handle those items as a CSCO examines the total delivered cost of a product. 

Just as functions would receive more recognition, so too would performance measures.  A CSCO would rationalize all the key performance areas in all respective operations towards demand fulfilment consistent with corporate objectives.  Quality measures, for example, would be focused towards the final outcome of a finished product.  The Purchasing function would focus on materials quality in relation to Manufacturing’s consistency to produce within specifications.  The Planning department would take into account inventory lead times in how they may affect product shelf lives.  Logistics would consult Purchasing and Manufacturing on supply and production lot sizes to avoid overstocking and to mitigate risk of damages. 

Having one supply chain leader means one decision-maker, one person to rally all of the supply chain functions in its day-to-day performance and long-term strategies.  In unity come strength, and having a variety of unique functions working together requires a single leader who not only can make timely decisions but also provide guidance in consideration for all concerned. 

The arguments against a single supply chain executive are more about finding the right person for the job than about the politics of one person having a lot of power.  There really is no argument against the logic of having a single leader for the supply chain. 

Fear prevents change in any organization.  Fear in having one person running the supply chain is understandable considering the qualifications needed and the power that comes with it.  But it should not be a deterrent but a means to understand and solve the issues that are causing such fear.  Fear should be a motivation for change, not an obstacle. 

High-ranking United States military field commanders have logistics experts as members of their staffs.  Just one individual who runs the whole supply chain of any military operation.  Private organizations should likewise have chief supply chain officers to singularly manage the supply chains that procure materials, manufacture products, and deliver them to customers.  The unity of supply chain functions under one CSCO allows for more focus in strategy and performance.  The fear that a CSCO would be unqualified or would have too much power does not argue against the need for a single leader.  On the other hand, it should motivate business leaders to address the issues such that the benefits of having one supply chain leadership can be gained. 

Originally released in LinkedIn: https://www.linkedin.com/pulse/why-organizations-need-chief-supply-chain-officer-ellery-samuel-lim

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