Why bimodal balance is required for the future of the supply chain

With CEOs increasingly concerned about operational excellence, the chief supply chain officer’s (CSCO’s) primary role continues to be bimodal in nature, encompassing the roles of growth partner and operational caretaker, according to Gartner, Inc. Gartner’s 2015 CEO and Senior Executive Survey explored the top initiatives and challenges of leaders across six global regions and a range of industries, including the supply-chain-intensive industries — manufacturing, retail, healthcare and natural resources. [caption id=“attachment_1983321” align=“alignleft” width=“640”]  Representational image: Reuters[/caption] “While growth still tops the list of top CEO strategic business priorities, our 2015 survey found that this has been tempered by a new focus on areas that have direct implications for a company’s ability to grow profitably, namely operations improvements and workforce,” said Dana Stiffler, research vice president at Gartner. “These areas have made huge jumps on 2015 priority lists, tripling and doubling, respectively, their presence on CEOs’ primary agendas. Sometimes, surviving a period of intense growth, or a period where growth is stymied by operational obstacles, can become the catalyst for the CEO to sit down with supply chain and operations leadership and make some changes, and this would appear to be the case for many CEOs today.” “As the CEOs’ No. 1 focus continues to be growth, CSCOs’ continued vigilance on operational risk and cost profiles is also a necessity. We continue to take the position that ‘bimodal’ — the ability to balance efficiency and cost takeout with growth-supporting capabilities — is the default orientation for successful CSCOs,” said Michael Dominy, research vice president at Gartner. “Now that the CEO has returned to a more balanced orientation, the need is greater than ever for the CSCO to be an active player in the profitable growth discussion.” For supply chain leaders to be successful, they must understand CEO priorities and motivations, and translate these into implications for the broader supply chain organization. Leading supply chain organizations — for example, The Gartner Supply Chain Top 25 and Gartner Supply Chainnovators — are identifying and eliminating gaps between the CEO’s and CSCO’s perceptions of priorities and opportunities, and using the dual focus on growth and operational improvements to invest further in trade-off-making capabilities, such as sales and operations planning (S&OP), cost to serve and segmentation. Rapidly shifting digital business models mean that CSCOs must also keep a hand in the technology game to remain relevant. CEOs’ plans for technology investment continue to focus heavily on the front office, but also target operations areas such as supply chain optimization and product cost; they are taking a more balanced view between growth and cost. Leadership of the highest-performing supply chains also takes a balanced view — with a focus on margin, not cost savings, when making decisions. This view is reflected in technology investment priorities. “CSCOs and other executives in industries that are highly dependent on effective supply chain management (SCM) should recognize and highlight the dependencies and impacts between various enabling technology initiatives,” said Stiffler. “For example, changes to customer experience management, the No. 1 priority investment, must be translated into action by supply chain and operations to deliver benefit. Likewise, digital marketing initiatives in supply-chain-dependent industries will underperform if they are not coordinated with supply chain.” Finally, Gartner believes that CEO concerns about workforce and cultural inertia should fuel CSCOs’ business case for talent and supply chain investment going forward. Talent and skills again rose to the top of the constraints list for CEOs and workforce was twice as important to respondents this year. Supply chain and IT are the crucial, adjacent glue and enablers for everything that surrounds them, and, as investments are made into digital business and customer experience, it is hoped that supply chain adjacencies will be considered and developed as well. In advanced customer-facing strategies, this is already happening, but is not yet mainstream. CSCOs and senior supply chain leaders need to do a better job of illustrating how the supply chain organization enables the CEO’s top priorities. Specifically, CSCOs need to show the talent contingencies between improved capabilities and growth and allocate resources to improve and retain these professionals, as well as recruit new staff.