Note to CEOs: Great Supply Chain Orchestras Have Great Conductors

5/22/2019

By Mike Regan, Co-Founder of TranzAct Technologies

As published in Logistics Management

Recently, I was moderating a panel discussion at a conference for company presidents and CEOs with two supply chain leaders—Mark Holifield, EVP, Supply Chain at Home Depot, and Tracy Rosser, former SVP, Transportation for Walmart. I invited them to the conference so they could share how Home Depot and Walmart use their supply chains as a competitive advantage and a key element in achieving outstanding financial results.

After Mark and Tracy highlighted the impact that CEOs can (and really, must) have in building a great supply chain, I asked the audience if they thought their companies had outstanding supply chains. One hand went up. A couple more went up when I asked how many would describe their supply chains as “good.” But overall, about 80% thought their supply chains were mediocre or worse.

This didn’t shock me. I’ve talked to a ton of CEOs over the years, and far too many believe they can delegate the building of an outstanding supply chain. That’s just not true, and it’s also why so many companies have mediocre supply chains.

I’ve often been asked, “Are there some common attributes among companies that have great supply chains?” The answer is an unequivocal, “YES!” Based on my experience, great supply chains begin at the top! Every company with a great supply chain has a CEO that understands the importance of the supply chain and is committed to investing in it.

Home Depot and Walmart have been blessed with CEOs who understand that great supply chains can create significant competitive advantages. CEOs who are committed to this send a very powerful message: We will have an effective and synchronized supply chain! When associates throughout the company (beginning with the CEO/president and moving to C-Level executives, vice presidents, directors, and managers) have a shared vision about how the end-to-end supply chain needs to be managed, great things can happen and they can achieve their desired financial and operational outcomes.

The need for supply chain alignment was underscored in 2018, when “The Transportation Perfect Storm,” created “earthquakes” that exposed “fault lines” in corporate supply chains. These earthquakes wreaked havoc on budgets and presented significant operational challenges. It also raised the following questions: “What happened, why did it happen, and how can companies prevent it from occurring in the future?”

As noted at our Perfect Storm Center, in 2018, a number of factors converged, causing extraordinarily tight capacity, significantly higher transportation rates and budgets that were blown to smithereens. Most companies were unprepared, leading almost 200 CEOs from S&P 500 companies to cite transportation and supply chain issues as having a negative impact on their earnings reports.    

So for any CEO who is wondering: “How do we prevent something like this from occurring again?” we have a simple but challenging response: “Get Engaged! Great supply chains don’t happen by accident—they happen by design and with a lot of hard work!”

As Mark and Tracy noted, since the “End-to-End” supply chain touches so many departments within a company, it can be easy for people protect their turf and form silos. Destroying these silos may seem like it requires an “Act of God.” But if He is not around, He can delegate responsibility to the CEO and ask them to take a wrecking ball to those silos in order to build a synchronized supply chain.

Synchronized supply chains are like an orchestra. Think of the departments within your organization as the instrument sections. Instead of string, wind, brass and percussion, you have procurement, operations, sales, customer service, IT, finance and, of course, transportation departments. Each one of these departments is important, but there is one only person who controls the orchestra—the conductor.

The conductor tells the musicians when and how to play their portion of the piece. A great conductor keeps the musicians aligned, so that the audience can hear an enchanting aria instead of a dissonant dirge.

So for those CEOs or presidents who want their companies to have a great supply chain, are you willing to do what has to be done to be a great conductor? If you’re willing to make that commitment, your supply chain orchestra will make beautiful music, delight your audience (a.k.a. shareholders) and have a much better bottom line.