The “supply chain department” didn’t exist in most companies until modern times. Supply chain executives still aren’t recognized in most C-suites. But they have one of the trickiest and most necessary positions in modern companies.
Supply chain managers have to bring a diverse set of business departments together, from suppliers to customer service to information technology. They have to interface with executives outside the company, from shipping to manufacturing to recruitment. Those with great leadership skills can bring out the best in the people they work with at every stage of the process and increase their company’s end-to-end visibility.
Plus, supply chains are evolving at lightning speed, meaning supply chain professionals have to be plugged in to news and information constantly. Increasing automation might remove people from parts of the supply chain, but it makes networks more complex, and more in need of management, than ever.
There’s an industry-wide need for supply chain leaders now, as Baby Boomers prepare to leave the workforce and the position grows in importance. Supply chain excellence goes hand-in-hand with great supply chain leadership. It’s critical that companies choose the right leaders for these roles, and give them the training and tools that they need to succeed.
Changing Demands for Supply Chain Managers
Supply chain leaders have been able to enhance company value for more than a century. Henry Ford created the assembly line, paving the way for the global expansion of the auto industry. Branded department stores, like Sears and Macy’s, promised customers the same inventory nationwide and had to source and transport them accordingly. And it’s impossible to talk about logistics management without referencing Amazon, which is in the process of turning its two decades of supply chain and logistics expertise into its own shipping service.
The explosion of e-commerce has led to huge demand for supply chain management skills, far outpacing the supply of people in the workforce with that expertise. Essentially every modern company needs to do some shipping and supply chain strategy. Whether that’s sourcing materials for manufacturing, shipping finished goods to customers or managing bulk accounts.
Supply chains are complicated, and these budgets can easily become companies’ most opaque. There are dozens of moving parts, often outsourced to contractors, and each relationship has to be personally managed.
That means supply chains are one of the greatest opportunities for reducing inefficiencies within companies. Organizations that can build efficient supply chains, founded on good relationships with those contractors and partners, can quickly cut costs and differentiate themselves from their competitors.
“There’s only two functions that are in an organization that have to know everything that goes on,” APICS CEO Abe Eshkenazi told Supply Chain Dive earlier this year. “The first one is finance… The other is supply chain.”
Leadership Qualities Needed
Supply chain managers need to be creative thinkers, tough negotiators and effective relationship managers.
Internally, they need to work with a number of departments. For example, information technology is critical to supply chain management, especially for companies that manage their own warehouses. Supply chain operations may require seasonal hiring pushes, which need the help of Human Resources professionals. And supply chain managers need to conform to the budgets set for them by CEOs and CFOs—or ask for more money.
Externally, supply chain managers have to manage relationships with a plethora of contractors and partners. There are shipping contracts, of course, with carriers like UPS and FedEx. But there may also be off-site manufacturers that fulfill product orders, staffing agencies that fill warehouse vacancies or trucking companies that move products to retail locations.
Organizing companies to collaborate across departments effectively can be daunting. It requires a clear, persistent communication of a compelling vision, not to mention ace organization skills.
Managing external contracts within a tight budget calls for negotiation prowess and constant pursuit of better deals.
On top of that, supply chain managers also need to fill their own staffs with sharp leaders who can manage every aspect of the process.
Doing all this at the same time? That’s what makes a great executive. And increasingly, C-suite leaders are recognizing these traits. Apple’s Tim Cook, General Motors’ Mary Barra, and Target’s Brian Cornell are all CEOs with backgrounds in supply chain management.
What Does the Future Look Like?
Supply chain management is only going to get more important. Every company needs a plan in place to identify and develop supply chain leaders, just as they would for finance and people managers.
Leadership in supply chain management is based on the same principles as corporate leadership across companies. Leaders need to be able to empower their subordinates, identify the best ideas, build workflows to implement them and keep them running efficiently. Leaders need to know when to make changes and cuts. They also need to manage a number of sub-managers and develop their leadership skills, so they can fulfill their own responsibilities as well as possible.
Great supply chain managers can make a significant difference not only in your company’s bottom line, but in employee development, product sourcing and customer satisfaction.
If you have any doubt that it’ll be a worthwhile investment, remember as you’re developing supply chain leaders, you may be developing CEOs too.