The hard truth of supply chain management

Alfred den Besten
Sep 15, 2022 6:54:53 PM

Supply chains come in all shapes, sizes and complexities. And supply chain management needs to adapt and plan ahead to keep everything flowing smoothly. That is why we will discuss how you can get the most out of your unique supply chain in this blog series. To guide us through this series we start each of our topics with a meaningful film quote that explains the core of our story.

The quote that inspired me for this topic:

“You can’t handle the truth.”

This quote is probably better known than the movie it originated from: A Few Good Men. It’s short, sweet, and has a core ‘truth’ to it that works in a wide range of circumstances. In the film, Jack Nicholson, as Colonel Jessup, bellows this accusation at Tom Cruise’s Lieutenant Kaffee and continues: “Son, we live in a world that has walls, and those walls have to be guarded by men with guns. Who's gonna do it? You? You, Lieutenant Weinberg? I have a greater responsibility than you can possibly fathom.” For this blog, I’ll step into my military shoes and explain how this hidden responsibility ties in with the world of supply chain management.

You won't handle the truth

Supply chain problems can be predicted well in advance, but only if you want to take the time and effort to do so. With the current economic and geopolitical climate you can reliably predict which supply issues are on the long-term horizon and could have a major influence on your business. For instance, when the European government decides that by 2035 no more new fossil-fuel cars can be produced, then you know there will be a huge pull in everything associated with electric vehicles.

In the same fashion, I can give examples for almost all industrial sectors, as most are directly influenced by political choices, be it in peace- or war-time. However, I also have a long list of companies that like to bury their head in the sand whenever it comes to long-term forecasting. In other words, they won’t handle the truth. As easy as it seems to give big budgets to a brand-new ERP environment, which only documents and reproduces supply chain data, it’s equally difficult for COOs, CFOs or CEOs to give only a fraction of that budget to a long-term planning system that actually does something intelligent with that data.

You should handle the truth

This kind of denial is rooted in the composition of the C-suite of a lot of organizations. The CEO is primarily concerned with the financial health of the company, as is the CFO of course. They both see their IT department as a sure-fire way to digitally transform their business and make more money. In their defence, the administrative automatization did start in IT, and they can rely on hard facts and immediate process improvements to justify any investments. On top of that, the CIO is often given a seat on the board, or works tightly together with the CFO to have a voice at the table.

On the other hand, the Chief Supply Chain Officer (CSCO) is only seldom seen in a company board room, even as his/her role is equally, if not more, important than the CIOs role. The CSCO guards the entire (not only financial) health of the organization: its supply chain. As the beating heart of every business, the supply chain isn’t put in the boardroom spotlight as often as it should. And that’s mainly due to its complexity. Even if the supply chain holds the key to a healthy organization and a lot of potential revenue, it’s seems quite difficult for a CSCO to explain the key details of a supply chain to, for instance, a CFO or CEO who often don’t have any experience with operational processes.

How to handle the truth

The ideal scenario to counter this lack of knowledge is to appoint a CEO who used to be a supply chain officer. Someone who knows the ins and outs of their company, someone who experienced its internal processes first-hand, and someone who appreciates the core value of the supply chain in an organization. In my view, this is exactly why the supply chain manager of today is the CEO of the future.
But ideal scenarios aside, the reality of today is that the CSCO should be able to explain the importance of the company’s supply chain to the entire boardroom. But how can you get to this stage?

  1. First of all, try to gauge your audience’s maturity when it comes to supply chain. How much do they already know, and how much will you need to explain to them? Try to start from their level of understanding and work your way up.
  2. Secondly, you need to ditch the technical jargon. Try to use business language and arguments to get their attention and perhaps use a clear metaphor to get your point across (a car metaphor always works in my experience).
  3. And finally, have a whole array of clear-cut evidence for your argument at your fingertips. Be ready to share facts, numbers and potential profits that can be gained from investing into supply chain improvements and forecasting.

    Don’t worry, you don’t have to go on your quest to the truth alone. At Solventure, we have countless real-life use cases at the ready to convince a CEO of CFO of the possible profits they could achieve if they reconsider their supply chain views. Additionally, we can give them a taste of what our predictive analytics can do for your company’s supply chain forecasting. But will they be able to handle the truth? We’ll surely give them all the tools they need to do so!

How can we help?

If you would like to find out about what a strategy-driven supply chain can mean for your company, we’ll be happy to assist you. Schedule a 30-minute call with Alfred den Besten, and we’ll guide you through our S&OP business template.

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