Note to CEOs: Want a Great Supply Chain? Then Get Involved!
Jun 15, 2022
Over the past eight months I've been conducting webinars and running around the country delivering a presentation to over 2,000 executives about why their company may have average or mediocre supply chain capabilities.
What prompted me to create the presentation I've been giving called "You Get The Supply Chain You Are Willing To Live With!" was the frustration I experienced when talking with C-Level executives who were letting me know that they were unhappy with their company's supply chain performance. All too often, these conversations would eventually get to what I called the "Do you think we have the right people?" dialogue.
So, knowing what to expect, when I got this "is it my people" question, I started telling these C-Level executives that I had never met "their people" so I wouldn't be able to answer that question. But one thing I did know is that if they were looking for someone to blame for their company's supply chain performance, they should begin by looking in the mirror.
Candidly, this comment may not "win friends and influence people" but one thing I have observed over the years is that companies that have great supply chains have C-Level executives who are committed to devoting the time and resources necessary to build a great supply chain. They know that you can't delegate building a great supply chain because ultimately there are decisions where they must be involved - decisions which have direct impact on their company's supply chain capabilities.
The presentation gets a bit more intense when I ask these C-Level executives whether they are taking their company's supply chain issues for granted. Of course, very few C-Level executives want to accept that this is in fact the case, so I ask them three very simple questions:
Have you mapped your supply chain in the past 12 months?
Have you stress tested your supply chain?
Do you have a written supply chain plan?
For about 80-85% of the companies we’ve talked to, the answer to all three of these questions is “no”. This and other conversations have convinced me that there's a lot of room for growth when it comes to supply chain management, and that growth can't happen without involvement and support from the highest levels of the company.
Let's make this real simple. As I mention in my presentation, according to respected supply chain organizations such as CSCMP, your company's supply chain activities represent about 15% to 20% of each sales dollar. So if your company has a $100 Million in sales, you have anywhere from 15 to 20 million in supply chain costs. If your company has $1 Billion in sales, you're looking at $150 - $200 million in supply chain costs. Add it all up and even though those are pretty big numbers, too many C-Level executives are still answering "No" to these questions!
So for those of you who may be asking: "What should we be doing?" we have some great resources.
One resource to start with is our eBook - Managing Your Transportation Spend from the Inside Out: How to Create a Transportation Spend Management Plan. This eBook illustrates how decisions throughout the company can impact overall transportation costs.
You can also listen to our interview with Professor David Simchi-Levi from MIT as he discusses supply chain resiliency, along with mapping and stress testing your supply chains. While you are there, we also have a "Grab a Seat at the Table" webinar that we hosted with our friends from CSCMP and NASSTRAC. This webinar recording features some outstanding resources discussing how their company has engaged executives throughout their organizations in building strong supply chains.
Of course, if you have any questions or would like to further discuss how your company can strengthen its supply chain capabilities, we welcome your calls or you can send us an email. We'll either provide what you're looking for or point you in the right direction.
BY MIKE REGAN, CO-FOUNDER OF TRANZACT
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