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Chief Supply Chain Officers Must Deliver Multiple Sources of Value to Retain Enterprise Influence

Chief Supply Chain Officers Must Deliver Multiple Sources of Value to Retain Enterprise Influence

May 7, 2024
Gartner says that the focus on cost management rather than growth may be contributing to a loss of influence.

Chief supply chain officers (CSCOs) are under a microscope these days, according to Tom Enright VP Analyst in Gartner's Supply Chain practice. and so they must expand their focus beyond cost management or accept a relegated role within the enterprise. CSCOs must be able to offer initiatives that can deliver multiple sources of value and align with their CEOs’ growth agendas. That was the theme of the keynote speach at the  Gartner Supply Chain Symposium/Xpo. 

“Stakeholders perceive that the worst of the supply chain crisis has receded, and CSCOs now face the prospect of being allocated fewer resources with the expectation of returning to a role more confined within the enterprise,” said Enright,  “CSCOs’ own priorities centered on cost management may be contributing to a loss of influence, as their CEOs remain steadfastly focused this year on driving growth.” 

For the supply chain function to retain influence in a “post-crisis” state, CSCOs must deliver multi-value contributions where their investments create maximum impact across key priorities that include growth, resilience, sustainability, risk reduction, and other priorities, while also addressing cost.

To accomplish this, Enright offered advice:

Define Focus Areas and Limits: CSCOs must chart a course between a narrow focus on cost reduction and a “do-it-all” approach that is destined to failure as resources dwindle and employee fatigue mounts from years of disruptions. Expectations should be set for each commercial segment, product group and physical network on where the team will focus on adding value and areas that will be intentionally de-emphasized.

“Being able to confidently define what a CSCO will say ‘no’ to is equally important to stating their priorities for each team,” said Enright. “This can only be done confidently after clarifying the risks and gaining internal and external buy-in. Once accomplished, this provides a clear basis for allocating resources in line with carefully considered principles.”

Build a Multi-Role Supply Chain Organization: A focus on delivering multiple sources of value requires a rethink of organizational roles to support this objective. Previously, organizational design revolved around the concepts of centralization or decentralization, a framework that lacked nuance. Instead, Gartner recommends organizations consider which activities need to be integrated at the enterprise level and which should be differentiated at the business unit or segment level—both for operational and design activities.

“Expanding the number of organizational approaches allows a greater level of flexibility in delivering multiple sources of value simultaneously,” said Enright. “It also allows the agility to change over time as business needs evolve.”

Identify and Deliver Multi-Value Plays: Rather than focus solely on cost reductions, CSCOs should instead identify the investments that allow them to achieve multiple objectives within one initiative. Enright noted that many organizations are finding synergies with initiatives that combine sustainability and cost objectives, while others are investing in new technologies to improve customer experience, enhance their employee value proposition and drive growth.

“While the supply chain function is most often delegated cost management responsibilities, it is indispensable for delivering other important forms of value,” said Enright. “It is up to supply chain leaders to identify and prioritize those investments that will deliver simultaneous sources of value, in line with their team’s strengths and stated priorities.”