Are Supply Chain Managers Running the Company?

Supply chain managers are playing a greater role in directing company operations and creating shared enterprise value as silos between suppliers and customers start to come down.

Technology plays a part in opening those pathways because it cuts across company barriers. Third-party logistics (3PL) providers promise to do the same by cutting across inter-company barriers to discover shared value.

Yet even with world-class technology and a logistics partner’s expertise, many silos persist and value remains unmined. Given the current economic environment, companies need to tap that hidden value. That need is escalating the supply chain function to a CEO and board-level task—especially when combined with other non-traditional supply chain challenges.

Here are 3 examples of supply chain managers being involved in areas outside their typical function.

Labor. Not long ago, Toyota was forced to repeatedly halt production at a plant after local labor shortages stopped component supply. Some vendors cited employee turnover and a skills gap for stalling production and shorting Toyota material supply. “Employees are frequently leaving and we can no longer maintain the required production volume,” said one supplier.

It’s not just material supply that must be wrangled in times of disruption. Sourcing skilled labor at vendors is now a supply chain concern.

Finance. SC managers are assuming financial responsibilities. Liz Door, chief supply chain officer for Ford’s EVs, recently asked suppliers to cut the cost of what Ford sources from them. “We value our suppliers’ collaboration and asked them to share their ideas for cost reductions in what they sell Ford,” she said. “Everything is on the table. Consider this a call to action.”

Demand slowdown creates other supply challenges. Some Chinese EV makers are taking almost one year to pay invoices, threatening supply and the overall relationship. SC managers must factor in cost cutting and slow payments in their vendor management functions.

Company expansion. Related to the financial duties is the quest for cost savings needed to drive enterprise modernization and expansion. “To fuel growth and transform our manufacturing and distribution network, we must invest and further strengthen our supply chain,” said Dan Poland, Campbell’s chief supply chain officer. “By leveraging our best-in-class in-house capabilities, combined with the expertise of trusted manufacturing partners, we will continue to make the highest quality products, with a more agile, flexible, and cost-effective manufacturing network… to build our supply chain of the future.”

In the past, labor, finance, and company expansion were not typically thought of as the province of supply chain managers. Now they have to be.