Consumer-Driven Technology Creates the Need for a C-Level Supply Chain FocusSeptember 13, 2011 by Michael Koploy
Due to workforce talent shifts and the apparently unbreakable mantra that “supply chains aren’t sexy,” Apple’s new CEO Tim Cook represents a metaphorical coup for a logistics field in a high-level talent crisis. After performing a couple of stints as interim CEO in Steve Jobs’ health-related absences, Cook was the logical choice to replace Jobs – and most onlookers and investors are seemingly just fine with Cook as Apple’s permanent CEO.
What’s most surprising about Cook’s move up the ladder at places like IBM, Compaq and then Apple, however, isn’t his track record or reputation, it’s his origins in manufacturing and the supply chain. Widely viewed as the father of Apple’s best-in-class supply chain, Cook’s success as a supply chain-minded executive is a rare sight – not because supply chain experts lack knowledge or skills. Rather, it’s that the industry is lacking supply chain talent in the first place.
Cook’s promotion is a move that other technology corporations should take note of. Why? Because Cook assuming the top spot is indicative of a growing need for supply chain expertise at the C-level. Carlos Cordón, supply chain professor at the Swiss business school IMD, describes this priority eloquently in his whitepaper, The Rise of the Chief Supply Chain Officer:
“In today’s business world, operations management is the backbone of many companies and efficient supply chain management, that is aligned with business strategy, is necessary to remain competitive and profitable. The effective integration of both internal and external operations is a key competitiveness driver in every company, and designing, refining and implementing new processes are key supply chain activities.” – Carlos Cordón, IMD
Given the complexities in supply chain relationships – not to mention the difficulty of streamlining the supply chain in a global economy – a larger focus on supply chain management is becoming a necessity. That’s why I believe organizations need to take Apple’s lead and include supply chain-minded executives at the leadership table: to help organize, implement and manage strategies to improve the business’ value chain.
Built-to-Order Computing Changes Role of Supply Chain
A key driver of the efficient supply and manufacturing chain that we see in tech companies today has emerged from built-to-order manufacturing of personal computers. Michael Dell was one of the first successful proponents of this model, creating a business that ditched the convention of one-size-fits-all PCs.
Alternatively, Dell offered products that were assembled after customers selected their desired specifications. In the 1990s, this model was atypical of the PC market (and consumer technology, in general) as many companies developed their products in bulk and shipped them quarterly. Dell’s model was revolutionary for computer manufacturing – reinforcing lean and just-in-time (JIT) principles that helped Japan rise to manufacturing prominence years before.
As Dell entered the retail space and began to add B2B to its core B2C business, Dell again adjusted its supply chain back to a make-to-stock manufacturing model. Overhauling the supply chain Dell had seemingly perfected was one of the many tough decisions Mike Cannon, President of Global Operations (essentially the chief supply chain officer), oversaw before he retired from Dell in 2009. For a company that arguably found success thanks to its supply chain, Cannon made a tough call – green lighting a change that would help the company as the technology industry prepared for the transition into a seemingly “post-PC world.”
Executive Boards Need a Supply Chain Stalwart
Since Dell’s emergence in the 1990s, we’ve seen Apple and other tech companies also rise. Many have done so thanks to the foresight of leadership that understands the role of the supply chain in a give-it-to-me quick world. Today, consumers expect more from their technology and from the companies that produce it, and an agile and effective supply chain has become even more important.
However, businesses that aren’t addressing their supply chain inadequacies are flailing in quicksand, from both a logistics network and a talent perspective. Our modern expectations of multi-channel commerce hinge on a logistics network that can display inventory levels in real time and a leadership team that can anticipate fluctuations.
A supply chain expert on the board of executives can push for the complete integration of business initiatives and supply chain strategy. Additionally, because these decisions often directly tie into marketing, sales and general operational strategies, the argument can be made that a supply chain executive deserves to be the top dog – as in the case of Cook at Apple.
“Mature supply chains are also being challenged by new market dynamics, and doing the same old thing isn’t working for executives of these companies, so new innovation and a willingness to adapt is essential…But supply chain leadership is most impactful when it works in harmony with marketing, sales and product innovation. That’s a winning recipe.” – Prashant Bhatia, RedPrairie
Prior to Cook’s promotion, Scott Belsky, CEO of Behance Network, was quoted that Cook was just as important – or more so – than Jobs, and would be fine if he was required to take over. Likewise, Bob Ferrari of Supply Chain Matters commented after the news broke that Apple would be fine with Cook at the helm, adding that the supply chain is a great place for future executives to “cut their teeth.”
Much of Apple’s success can be pointed back to its centralized, integrated focus: from its supply chain, product marketing, retail experience, and unique company culture. As the COO, Cook helped create a team that is greater than the sum of its parts – a streamlined, lean and JIT technology company. Cook is a great example of the effectiveness of an executive with a “supply chain mentality” – and why other corporations should take notice.
Integrated Software Key to C-Level Supply Chain Success
While more supply chain-minded executives are certainly needed to articulate integrated strategies – it is also critical that these leaders understand the intricacies of how to optimize the supply chain using technology. In fact, Bhatia notes that modern supply chain software allows managers to analyze interdependant variables that one individual could never have done in the past. “Software has opened up opportunities for new levels of optimization and effectiveness,” adds Bhatia.
One of the keys, though, will be software that mimics integrated business initiatives. These solutions will feature:
- Integration with enterprise resource planning (ERP) software
- Full-featured business intelligence (BI) with data integration
- Web-based and mobile deployment
- A strong focus on communication and information visibility
- Accessibility of real-time and accurate data
Eric Schmidt, former CEO and current executive chairman of Google, recently discussed his thoughts on the future of technology, describing it as mobile, local and social. This holds for supply chain software as well, given that mobile deployment capabilities and access to real-time, local data are increasingly important for supply chain managers that often need to make decisions remotely. On cue, Salesforce.com recently announced its investment in supply chain and ERP software – further illustrating that even social marketing software vendors are decidedly looking to make enterprise solutions part of their footprint.
Talent is Still Crucial – and Lacking
What’s stopping a stampede of supply chain managers to the C-level? We have an economy and society driving demand and the powerful back-end software solutions to streamline operations – so where are the potential executives to step up to these C-level roles? The problem is that many corporations simply can’t source the talent.
Ken Cottrill, MIT Global Communications Consultant, discusses this in his whitepaper Are You Prepared for the Supply Chain Talent Crisis? In the whitepaper, Cottrill notes that the decreasing baby-boom workforce and shift in workforce talent are leaving the talent pool dry. Additionally, the talent isn’t ready for what the economy is demanding – supply chain experts that can not only connect multiple corporate divisions, but can also transition from a traditionally execution-based role to a strategic one. He summarizes:
“Supply chain faces a severe shortage of talent at a time when the demands of a profession have never been greater. Globalization, market uncertainty, shifting demographic patterns, and the emergence of supply chain as a strategic function are some of the factors that are driving the skills shortfall.” – Ken Cottrill
What Cottrill describes as necessary for supply chain talent success also describes talent capable of C-level ascension. So if we were building the ideal candidate from the ground up (since they appear so few and far between), this individual would have:
- Experience managing large, global supply chains.
- A track record for being able to adhere to lean and just-in-time fundamentals.
- Experienced enough with SCM software to know how to implement and leverage its benefits.
- The ability to continually push both strategic and operational supply chain improvements.
It’s a tall order, and the industry simply lacks the talent to fill the roles, today. Put simply – we don’t really have time for the talent to work up the ranks 20 years. Fellow ERP Analyst Derek Singleton wrote a great and timely piece recently about how U.S. manufacturing needs a youth infusion. Many of his thoughts apply to the supply chain, as well.
Apple’s got their man, and Cook will undoubtedly be very successful. Who else will we see move to a similar position? Do you see other companies making similar appointments in the near term – either by appointing an individual at the C-level to manage the supply chain or to hand the reigns to a supply chain expert? Share your thoughts below.
Thumbnail created by Graham Hillis.