Executive Briefings

Global Supply Chain Management: It's Time to Take Control

Analyst Insight: As of 2010, the traditional relationship between supply chain and business is in full revolution, and global supply chain management has become more important than ever. The roles of supply chain and manufacturing within organizations continue to evolve, making it clear that manufacturing should be reporting to supply chain, instead of the other way around.

Since the 1960s, the people who manage computers have seen their titles and span of control morph from the back-office geek known as Manager of Data Processing to the VP of MIS in the 1980s and ultimately the Chief Information Officer by the year 2000.  This elevation of role was driven by technology advances that changed the competitive dynamics of business.

The same thing is happening to the supply chain role today.  Where once supply chain really meant purchasing (inbound supply) or shipping (outbound supply) and everything about it was subservient to manufacturing, now the tables have turned.  Manufacturing, which is increasingly automated, is often done by third parties working on contract.  Since sourcing executives are often responsible for contract manufacturing relationships and suppliers increasingly work directly with engineering to develop subassemblies rather than just shipping parts, manufacturing should now be reporting to supply chain.

Unfortunately, many heads of global supply chain still find themselves with huge dotted-line organizations and only a skeleton crew of process architects, technology people, and supplier management staffs as they try to keep pace with changes in industry.  In a recent study of 198 global companies, just over one third of supply chain organizations controlled manufacturing.  And while 78 percent owned responsibility for distribution, a mere 31 percent had any influence over new product launch and only 25 percent had control of post-sales support.  This means the notion of a Chief Supply Chain Officer remains something we are working towards, and not yet an established fact.

The Outlook

If the lesson of the CIO's rise teaches us anything, it is that technology will eventually overwhelm tradition.  The global supply chain in 2010 lives, learns and evolves in an almost organic fashion, and supply chain people understand that better than anyone else in business.  If it is not managed by professionals who understand its power and potential, it will do more harm than good.

Since the 1960s, the people who manage computers have seen their titles and span of control morph from the back-office geek known as Manager of Data Processing to the VP of MIS in the 1980s and ultimately the Chief Information Officer by the year 2000.  This elevation of role was driven by technology advances that changed the competitive dynamics of business.

The same thing is happening to the supply chain role today.  Where once supply chain really meant purchasing (inbound supply) or shipping (outbound supply) and everything about it was subservient to manufacturing, now the tables have turned.  Manufacturing, which is increasingly automated, is often done by third parties working on contract.  Since sourcing executives are often responsible for contract manufacturing relationships and suppliers increasingly work directly with engineering to develop subassemblies rather than just shipping parts, manufacturing should now be reporting to supply chain.

Unfortunately, many heads of global supply chain still find themselves with huge dotted-line organizations and only a skeleton crew of process architects, technology people, and supplier management staffs as they try to keep pace with changes in industry.  In a recent study of 198 global companies, just over one third of supply chain organizations controlled manufacturing.  And while 78 percent owned responsibility for distribution, a mere 31 percent had any influence over new product launch and only 25 percent had control of post-sales support.  This means the notion of a Chief Supply Chain Officer remains something we are working towards, and not yet an established fact.

The Outlook

If the lesson of the CIO's rise teaches us anything, it is that technology will eventually overwhelm tradition.  The global supply chain in 2010 lives, learns and evolves in an almost organic fashion, and supply chain people understand that better than anyone else in business.  If it is not managed by professionals who understand its power and potential, it will do more harm than good.