CEOs priorities are shifting, enter the CSCO
CEO strategic business priorities are shifting, and for the future of the supply chain it is more important than ever for the CEO and chief supply chain officer (CSCO) to maintain a 'bimodal balance', according to Gartner.
CEOs are increasingly concerned about operational excellence, therefore, the CSCOs primary role continues to be bimodal in nature, encompassing the roles of growth partner and operational caretaker, says Gartner.
"While growth still tops the list of top CEO strategic business priorities, our 2015 survey found that this has been tempered by a new focus on areas that have direct implications for a company's ability to grow profitably, namely operations improvements and workforce," says Dana Stiffler, Gartner research vice president.
"These areas have made huge jumps on 2015 priority lists, tripling and doubling, respectively, their presence on CEOs' primary agendas.
“Sometimes, surviving a period of intense growth, or a period where growth is stymied by operational obstacles, can become the catalyst for the CEO to sit down with supply chain and operations leadership and make some changes, and this would appear to be the case for many CEOs today."
"As the CEOs' number one focus continues to be growth, CSCOs' continued vigilance on operational risk and cost profiles is also a necessity," says Michael Dominy, Gartner research vice president.
“We continue to take the position that 'bimodal' - the ability to balance efficiency and cost takeout with growth-supporting capabilities - is the default orientation for successful CSCOs.
"Now that the CEO has returned to a more balanced orientation, the need is greater than ever for the CSCO to be an active player in the profitable growth discussion," he says.
For supply chain leaders to be successful, they must understand CEO priorities and motivations, and translate these into implications for the broader supply chain organisation, Gartner says.
Leading supply chain organisations are those that identify and eliminate gaps between the CEO's and CSCO's perceptions of priorities and opportunities, and use the dual focus on growth and operational improvements to invest further in trade-off-making capabilities, such as sales and operations planning (S&OP), cost to serve and segmentation.
Rapidly shifting digital business models mean that CSCOs must also keep a hand in the technology game to remain relevant, Gartner says.
CEOs' plans for technology investment continue to focus heavily on the front office, but also target operations areas such as supply chain optimisation and product cost; they are taking a more balanced view between growth and cost, the analysts say.
Leadership of the highest-performing supply chains also takes a balanced view - with a focus on margin, not cost savings, when making decisions. This view is reflected in technology investment priorities.
"CSCOs and other executives in industries that are highly dependent on effective supply chain management (SCM) should recognise and highlight the dependencies and impacts between various enabling technology initiatives," says Stiffler.
"For example, changes to customer experience management, the number priority investment, must be translated into action by supply chain and operations to deliver benefit.
“Likewise, digital marketing initiatives in supply-chain-dependent industries will underperform if they are not coordinated with supply chain," she says.
Finally, Gartner believes that CEO concerns about workforce and cultural inertia should fuel CSCOs' business case for talent and supply chain investment going forward.
Talent and skills again rose to the top of the constraints list for CEOs and workforce was twice as important to respondents this year.
"Supply chain and IT are the crucial, adjacent glue and enablers for everything that surrounds them, and, as investments are made into digital business and customer experience, it is hoped that supply chain adjacencies will be considered and developed as well," says Gartner.
In advanced customer-facing strategies, this is already happening, but is not yet mainstream. CSCOs and senior supply chain leaders need to do a better job of illustrating how the supply chain organisation enables the CEO's top priorities.
Specifically, CSCOs need to show the talent contingencies between improved capabilities and growth and allocate resources to improve and retain these professionals, as well as recruit new staff, says Gartner