At the Starting Line: New Year’s Resolutions for Supply Chain and Logistics Executives

StartingLine_StevenDepolo_FlikrHappy New Year! I hope you all had a fun and relaxing holiday.

If you’re like me, today is about easing back into the work routine — like a runner stepping to the starting line and making sure his shoelaces are tied one last time before the race begins.

What challenges and opportunities lie ahead? We’ve made our predictions, but it’s the unexpected that makes supply chain management so exciting and demanding.

Did you come up with any New Year’s resolutions to improve as a supply chain and logistics leader this year? Below are my five recommendations, which I first shared a couple of years ago but they’re still valid and important today. If you have your own list of resolutions, please post a comment and share.

Here comes the starter, arm raised, pistol in hand.

“Runners on your mark, get set…”


From “5 New Year’s Resolutions for Supply Chain & Logistics Executives” originally published on January 14, 2014:

1. Ask “What are the risks?”more often. Supply chain management is risky business — and the risks are growing every day. Natural disasters, product shortages due to quality issues, the impact of currency rates on product costs and demand, and disruptions caused by IT service failures or security breaches are just a few examples of the risks supply chain executives face every day. Unfortunately, most supply chain executives and their teams focus predominantly on just two factors, the tradeoffs between cost and service, with risk rarely entering the conversation — until a disruption occurs and then everyone goes into panic mode.

Simply put, many companies are still falling short on supply chain risk management, and they continue to pay the price.

The good news is that leading practices in supply chain risk management are well documented in various books and publications, and new software applications are emerging to help companies manage this process. The challenge is getting executives to rethink supply chain risk management — that is, getting to the point where thinking and talking about risk (and taking proactive action to mitigate it) is as common and instinctual as talking and thinking about cost and service. And the first step is asking “What are the risks?” whenever you’re discussing supply chain strategy or decisions. Finding the answers will require a lot of data collection and hard work, but the return on investment will be clearly evident the next time a supply chain disruption occurs and you’re able to recover faster and with less financial impact than your competition.

2. Learn to speak the language of the CFO. Whenever I ask supply chain executives what knowledge or skills they need to improve in order to advance in their careers, the most common response I get is improving their knowledge of finance and gaining experience managing a P&L. CFOs rarely know anything about supply chain management. The same is true for CEOs. Yet, supply chain executives need to get their buy-in for their budgets and strategic initiatives. Making the case for a large investment in technology or resources using supply chain terms — “If we invest $10 million in this project we’ll improve on-time delivery from 92 percent to 96 percent” — is meaningless to the CFO. You have to equate the value proposition to metrics the CFO understands and cares about, such as working capital, cash flow, and other items linked to the company’s P&L and balance sheet.

What steps can you take to learn the language of the CFO? Take a finance course if you’ve never taken one. Read your company’s quarterly financial reports and listen to the earnings calls. And most importantly, establish a closer relationship with your CFO. Meet for lunch or coffee once a month to discuss ideas and questions together in a casual setting. And in the process, the CFO will learn to speak the language of supply chain management, which is equally important.

3. Be more than a cost-cutter: be a sales hero too. For a long time, C-level executives viewed supply chain management, especially the logistics function, as a cost center. As a result, cutting and controlling costs became the top priority for supply chain executives. Today, however, cost management is a given — it’s what every supply chain executive is expected to do. Therefore, how do you differentiate and make a larger impact on the organization? Be a sales hero — that is, look for ways to leverage supply chain management to drive top-line growth and increase market share.

For example, a supply chain executive at a leading food manufacturer is working closely with the sales team to educate them on how to position supply chain and logistics capabilities as a competitive differentiator with clients. Your ability to respond quickly and effectively to fluctuations in demand, adjust order sizes and delivery frequency as required, and provide timely and accurate visibility to orders, inventory, and other metrics are all competitive weapons. Use them to your advantage.

4. Choose trust: walk the talk on collaboration. At an MIT conference [in 2013], Tom Linton, Chief Procurement and Supply Chain Officer at Flextronics, presented his top 10 list of supply chain trends. Number one on his list was “Non-Zero” Supply Chains Win. In other words, supply chains focused on greater collaboration between everyone in the ecosystem will win. The problem is that according to a recent AP-GfK poll, only one-third of Americans say most people can be trusted. When you consider that so much of supply chain management involves people and relationships, this decline in trust is very troubling. And it suggests that establishing truly collaborative and Vested relationships is actually becoming more challenging, not less.

There is plenty of research by Nobel Prize winners and books by leading academics demonstrating the benefits of collaboration and taking a “What’s In It for We” approach to working with business partners. But to achieve those benefits, you have to take the first step: choose trust and see where it takes you.

5. Make the time for learning — and teaching. According to leadership expert Ken Blanchard, “when you stop learning, you stop leading,” and this is especially true in supply chain management. New technologies, business models, competitors, legislation, economic issues, and so on are constantly emerging. Therefore, it’s critically important for supply chain executives to stay informed of these trends and make the time for learning because yesterday’s leading practices might no longer apply and they’ll need to develop and implement new ones to succeed moving forward.

But learning is not enough — you also have to make the time to teach. There is a shortage of supply chain and logistics talent in the industry, but addressing the problem is not just the responsibility of universities and HR departments — it’s your responsibility too. Be a mentor to the young professionals on your team. Work with your HR department to develop peer-to-peer learning programs. And if you really want to stretch yourself, start a blog and share your knowledge and experience in writing. The experience will not only improve your communication skills, it will also spark questions and discussions, which can lead to new ideas and insights about how to improve your supply chain.