The APICS Interview | January/February 2013 | 23 | 1
The evolving role of supply chain and operations managers
Editor’s note: The role of supply chain and operations management professionals is constantly evolving. More and more, these leaders are being asked to take a prominent seat in the C-suite in order to deliver aggressive performance goals and help guide informed decision making across the business. Here, Brian Meadows and Herb Schul of Americas Advisory Supply Chain and Operations at Ernst & Young share with APICS magazine managing editor Elizabeth Rennie how supply chain and operations management leaders can learn to drive business growth; guide corporate strategy; create standard processes on a global level; and, ultimately, optimize the potential of the supply chain.
: It’s clear that the roles of supply chain and operations management professionals are growing exponentially. What is behind this shift?
: Supply chain and operations management professionals have always played a large, albeit quiet, role in the success of a company. What we’re seeing now is not necessarily a growth in their role, but rather, a shift in their responsibilities. Today, these executives are being asked to act as strategic leaders within the organization. This means they are taking on greater authority and accountability for driving growth across the organization.
This shift is being driven by a few different factors. Traditionally, supply chain and operations management professionals were responsible for satisfying the needs of a myriad of customers. This required the management of hundreds of different processes and decisions, many of which had been outside the person’s control.
Corporations today are laser-focused on cost and cash productivity, and the authority to define how a company operates to ensure end-to-end synchronization—and ultimately, revenue—is critical. This drive for synchronization is elevating the natural need for the supply chain and operations management professionals to become more strategic in their role and to take greater command of the operation of a company. The supply chain and operations management professional’s responsiveness to operate in this way has reinvigorated the operating executive to work at the level that is typically the intended purpose, addressing operations with a holistic view of business performance … There is a natural balancing of the tension that traditionally exists between the sales and marketing function and the finance function.
: Why do you believe it’s important for today’s supply chain and operations management professionals to have a more prominent role? And what, specifically, should these people do to respond to these new expectations?
: Supply chain and operations management professionals engage regularly with hundreds of customers, suppliers, and manufacturers across all industry verticals and geographies. This engagement gives these executives a unique perspective into what it will take to delight a customer—for example, focusing on reliability and lead times with highly variable, unpredictable demand; or focusing on integrated business planning when the product portfolio is changing with greater frequency.
As organizations look to become leaner and more agile, it’s imperative to understand how strategic organizational changes will affect the customer. Making cuts without an agenda focused on your customers’ expectations could make it more challenging to keep these customers. It is the insights of the supply chain and operations management professionals that can ensure business decisions are being made using operations to guide better, smarter, and faster decision making across the organization.
: Smart supply chain and operations management professionals should be fundamentally rethinking what, how, and where the work gets done. They should be looking outside of their departments and engaging across the organization to understand how each business unit operates and how operations can support and drive business performance and growth.
: What are some proven tactics for getting company decision makers to recognize the importance of the supply chain for the overall business strategy?
: While many company decision makers may understand the function of the supply chain from a broad perspective, very few understand the importance of aligning business strategies with underlying supply chain capabilities. To rectify this, supply chain and operations management executives need to be proactive. First, there must be a clear understanding of the supply chain: what it is, who it affects, how it operates. Typically, this will then launch into discussions on the sales and operating process and the procurement and supplier management process.
: Supply chain and operations management professionals need to seek accountability early and understand that authority is earned and comes with trust and a complete understanding of the benefits of the supply chain to the business. They should be continually providing their business teams and customers with proactive feedback on day-to-day operations. The importance of proactive feedback is most apparent when planning for the unexpected. [These] professionals need to have a firm understanding of the “pinch points” of the supply chain that create uncertainty and will affect demand. By bringing this understanding to the table, supply chain and operations management professionals have the opportunity to create proactive business plans and processes in the event of a supply chain failure.
If a failure does occur, these professionals are seen as being responsive, aware, and proactive. Ultimately, proactive, predictive feedback should become part of their modus operandi. This type of effective communication can help drive the decision-making processes and ensure that supply chain and operations management professionals not only have a seat at the table, but also a voice.
: The best advice is to be strategic and targeted in your approach to decision makers. Boardrooms respond best to streamlined proposals that prioritize where the business should either invest or improve performance, for example, reliability, predictability, cost, quality, or customer service levels. Executives need to understand how the supply chain relates to the broader business and how it can be leveraged against the transformation agenda that is purposefully set.
: What stumbling blocks can get in the way of this objective? How can they be overcome?
: The primary stumbling block is company culture—how decisions are made and the role of the supply chain and operations management executive are ingrained in the traditional understanding of business executives. It’s not something that will be easily changed.
: When all is said and done, the business is comprised of a system of processes all interrelated to satisfy the end user. The opportunity to stand up and help companies manage the web of decisions that functionally may be ideal but from a system standpoint but suboptimize the value to the customers, investors, or suppliers is the ultimate supply chain and operations platform.
: What types of results should businesspeople aim for with regard to their supply chain and operations management strategies?
: It really depends on the business’s overarching goals, [but] what we do know is that, at the end of the day, the purpose of the supply chain is to deliver a satisfying experience, product, or service to its customer at the best cost possible.
: The intended results are that the supply chain yields a high customer retention rate, a low turnover, and overall growth and competitive value. That being said, there are many different ways that a company can define and measure these values.
: You encourage supply chain and operations management professionals to view the entire supply chain from the perspective of the customer. Can you share a little more about that?
: It is absolutely important to understand [the supply chain] from the perspective of the customer. This allows supply chain and operations management professionals to understand whether there are issues that prove problematic in terms of satisfying a particular customer demand. To spell that out further, the customer requirements—as defined by service levels, quality, and cost—provide the constraints that supply chain operations must optimize within.
: Also, a company’s sales and finance plans provide the investment and planning constraints that must be scaled to. With this in mind, the supply chain and operations leadership are tasked with defining the strategy to deliver, and define how to deliver, the promise to customers by ensuring that the most cost-effective and efficient operating environment is currently in place … So, the distribution, manufacturing, planning, procurement, customer service, and order fulfillment processes should be organized and operating with this focus as the centerpiece in order to ensure functional optimization doesn’t distract from the system optimization necessary to deliver on the customer promise.
: You advocate that supply chain and operations management professionals adhere to seven key goals:
- standardize operating processes at the global level
- leverage supplier relationships to reduce cost and improve innovation and flexibility
- restructure the supply chain for greater visibility
- improve the customer experience
- apply reliability and predictability, not only in manufacturing, but also across the supply chain
- use in-source versus outsourcing trade-offs
- plan for the unexpected.
Which of these is most important for APICS magazine readers to focus on?
: There’s no one-size-fits-all solution; it depends on the industry. Our belief is that simplicity and clarity of focus are necessary to sustain the change needed to ensure the most efficient and effective operating environment possible. For example, most of your readers are probably focusing on reliability. Understandably so. But a clear understanding of how to sustain and drive a more reliable operating performance depends in large part on the throughput velocity. Slowing down can, and often is, the most important tactic to improve system performance efficiently and effectively. Therefore, it’s not the initiative itself, but rather, how you implement and leverage the concept to achieve the desired results that matters.
The views expressed here do not necessarily reflect the views of Ernst & Young LLP.
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