Getting the board 'on board' with your supply chain strategy
You’ve finally done it: Analyzed the data, looked at the metrics, maybe even consulted a third party and devised the perfect supply chain strategy. It’s ready to go, with just the small, teeny tiny step of presenting it to the company board for approval.
Is this where it all falls apart? For the supply chain managers nodding their heads, the board doesn't have to be an obstacle.
Supply chain is a strategic advantage
Support for a supply chain strategy must come from the top-down. At RILA’s recent supply chain conference, Reuben Slone, senior vice president of supply chain and logistics at Walgreens, emphasized CEOs must view their company value chains as an investment strategy.
Most company executives seems to share that mindset.
When Slone surveyed attendees at the conference, 80% of respondents said their CEOs view supply chain as a strategic competitive advantage rather than a cost to minimize.
A recent Deloitte study of chief procurement officers revealed similar results — 73% of procurement leaders believe they have the support of their organization’s leadership.
Armed with this support, supply chain managers must make sure their message resonates with the board.
Willis Weirich, senior vice president of supply chain and operations at Neiman Marcus, outlines a few strategies to do that:
Speak the language
Perform simple tests
Have peers champion your ideas
S&OP, DCs, 3PLs — supply chain professionals love their acronyms, but the acronyms are very supply chain specific, and they seek to solve niche problems. The company board envisioning a big-picture strategy doesn't necessarily value the nitty gritty details of sales and operations planning, but rather the overall message of how the planning will help the company as a whole.
“Neiman Marcus is all about demand and growth,” Weirich said. “So I have to make sure the messages I’m presenting achieve either demand or growth objectives.”
Demonstrating that correlation to the board is easier the more a supply chain strategy aligns with the company’s goals. For example, if a company is pushing forward on meeting sustainability markers, a warehousing strategy that reduces plastic packaging waste and increases recycling will hit the spot.
“I understand ‘simple test’ is probably an oxymoron,” Weirich said. The idea, however, is supply chain executives spend a great deal of time on planning and creating roadmaps. A lot of those strategies look great in theory, but other challenges may arise when the plan is executed.
One of the most common ways to perform a “simple” test is through a pilot program. Perhaps you roll out your strategy only in the Pacific Northwest, but fine tune the results before branching into the California market.
For Neiman Marcus, customers were ordering large household items online and wanting the items delivered to their doorstep. This created a challenge for the retailer, because it couldn't use the same logistics methods for clothes and accessories to also deliver furniture.
To solve the issue, Neiman Marcus tested a cloud-based solution devised by technology firm Convey to track bulk deliveries to customers. After a month, delivery time was reduced by nearly a quarter.
With evidence-based metrics from a test, the board can see tangible results. For Weirich, the test “allowed us to build internal support” for its bulk delivery program.
The more cross-departmental support behind a supply chain strategy, the more likely the board will realize its value.
“There’s nothing better than being able to sit back and look as the rest of the organization thanks you for helping move their business forward,” Weirich said.
Because supply chains are so integrated, their strategies often come with the added benefit of helping the marketing team or the IT department. Sometimes that happens by chance, but the better solution is to work with other teams before presenting to the board.
Aligning technology is particularly important, which is why it’s critical supply chain executives are friends with their IT counterparts. The collaboration lessens the likelihood of a digital disconnect, which is prevalent in many companies. According to research from Gartner, 75% of digital projects within a company are not aligned.
When a strategy is devised with other teams’ inputs, it garners further support, helping to carry the idea over the finish line.
Piercing the supply chain veil
The board-supply chain relationship is not a one-way street. As much as it’s important for supply chain professionals to present their evidence-based strategy in a comprehensive way, it’s equally important for the board to listen to the challenges and solutions proposed by supply chain managers.
“By our DNA, supply chain professionals like to be under the radar,” Weirich said. And in the past, he’s viewed his work as mostly behind the scenes. But e-commerce is changing that and making supply chain strategy a critical component to customer satisfaction.
Customers want fast and accurate delivery to their doorstep — that’s logistics. Customers want to shop on-line but return to store — that’s inventory management. Customers want to know the origins and ethics of their products — that’s sourcing and visibility.
These are all key demands from customers, and central tenets of supply chain management.
If company boards want to satisfy their customer demands, it only makes sense for supply chain managers to “have a seat at the table.”
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