Material handling and logistics getting high-level attention

July 26, 2010
Companies are now more likely to have executive-level supply chain leaders, according to a recent Tompkins Supply Chain Consortium survey of leading retail and manufacturing companies. The executive briefing – The Structure of Today’s Supply Chain Organizations, based on the survey – notes that throughout the past five years, the organizational level of the senior-most supply chain executive has gradually moved higher. Today, nearly half the retail and manufacturing companies surveyed have a supply chain leader at or above the executive vice president level. This has major implications for material handling managers, says Bruce Tompkins, Executive Director of the Consortium and author of the briefing.

“Now people with a general supply chain background are finding themselves in the C suite reporting to a president and that will make opportunities for people to move up into those levels where there weren’t such levels before,” he told MHM. “As organizations become more matrixed they have multiple hats on and that means there will be an opportunity for material handling people to branch into other areas of supply chain as well.”

Distribution center operations, transportation, network design and planning functions are now senior executive level responsibilities. Outsourcing supply chain functions is also growing, particularly for execution functions such as distribution and transportation. However, if an organization doesn’t also keep logistics expertise resident, they’re asking for trouble.

“Outsourced functions require oversight, and if you don’t plan for that you can make some mistakes,” Tompkins adds. “Smarter companies realize there is a resource required to manage those outsourcing relationships and when they do that well, they get the benefit they expect. If they don’t keep that core knowledge in their own organization they can lose sight of everything they had in the past.”

The consequences of that are shown in Tompkins’ study. His survey reveals that some companies do not have any part of their supply chain organization responsible for setting inventory targets.

Likewise, more than a quarter of retail companies and 14% of manufacturing companies surveyed have no formal process for aligning supply chain goals. Manufacturing companies tend to achieve goal alignment by reporting to a single executive, and retail companies generally have their common supply chain goals established by senior leadership.

“These gaps in goal alignment indicate significant opportunity for better communication and integration of supply chain functions,” Tompkins concludes. “However, companies are discovering these opportunities for improvement, and there is an increasing trend toward resource sharing across divisions and business units.”