Putting it all together

The top of the organization is the right place for most companies to begin negotiating the functional trade-offs we’ve outlined. But many senior-management teams give precious little attention to supply chain issues. Across the trade-offs our survey explored, for example, no more than 26 percent of the respondents said that their companies reach alignment among functions as part of the supply chain decision-making process. Moreover, 38 percent say that the CEO has no or limited involvement in driving supply chain strategy.

This is a mistake. CEOs set the agenda for their leadership teams, and it is up to CEOs to encourage and facilitate meaningful discussion of important cross-functional supply chain issues. CEOs can go further too. In some of the most impressive supply chains we’ve seen, the chief executive promotes collaboration and performance improvement with missionary zeal. The CEO of an apparel company, for example, would always make a point, during store visits, of asking shop floor staff how its recent commercial decisions had affected store operations, including logistics. He would bring up this feedback in meetings with purchasing and supply chain teams and continually encouraged his managers to follow up themselves and engage with shop floor staff on similar topics.

CEOs looking to get started can benefit from asking themselves five questions, which in our experience can help leaders begin to ferret out situations where faulty collaboration may be preventing supply chains from reaching their full potential.

1. Is production capacity being developed in the right locations—both for today and the future?
2. Is the sales group doing all it can to make demand smooth and predictable?
3. Are customers offered the service levels they really need?
4. Is my marketing department calling for too many niche products that may be too costly to supply?
5. Are our purchasing and sourcing decisions being made with their supply chain implications in mind?

Poor collaboration and silo thinking have long thwarted the efforts of companies to get more from their supply chains. In a future characterized by rising complexity and uncertainty, solving this perennial problem will change from a valuable performance enhancer to a competitive necessity.