Excellence in Supply Chain Management Requires Supply Chain Expertise in the Boardroom

All companies – especially retailers, franchised and independent – depend on their supply chains to maintain the compelling customer relationship that today’s demand delivery economy requires.  This includes availing attractive and competitive pricing to customers, while producing positive financial results for the company’s investors. For companies that realistically seek to achieve this balance, recruiting board members who can speak to and understand the critical role of the supply chain is self-evident. Amazon, Apple, Burger King, Microsoft, IKEA and Proctor & Gamble are examples.

While providing distinctive and excellent customer service is impossible without a well-managed and integrated supply chain, many C-suite executives and board members are more attracted by topics like entering new world markets, taking on new acquisition targets and expanding products and services. Yet critical supply chain topics like inventory control, technology implementation, master data standardization, cyber/security risk and distribution/warehouse optimization must be understood and discussed in the boardroom.

Sadly, too many companies force their supply chain managers to turn themselves inside out to get the C-suite executives’ and board members’ attention. They end up communicating supply chain needs to distracted executives in the most ineffective ways. This is true for strategic board decisions on matters that are inextricably dependent on the capacity of the supply chain to perform quickly and at high quality levels, and which will materially affect the company’s customer service or product offerings. This is also true for tactical decisions, especially those necessary to ward off crisis – like political risks with component suppliers, health and safety concerns and labor volatility. It is the difference between mediocre versus world-class performance.

Of course, for optimal communication, supply chain executives need to be cross-functional, cultivated and trained to ensure they understand the company’s business and its strategic concerns. Supply chain executives must be viewed as trusted business advisors and produce for C-suite executives and board consideration key performance data that can be translated into financial metrics that helps board members understand the supply chain’s performance, challenges and needs. 

But an important part of making this possible is to have a board member that is experienced with and sensitive to the dynamics between the company’s supply chain function and the boardroom. This board member will view supply chain management and risks from both an enterprise-wide perspective as well as from the narrower viewpoints of legal, business continuity and reputational risk, holding the company and its suppliers accountable for promised performance.  It is that board member’s perspective that will create the bridge between the board and the company’s supply chain function, providing immeasurable benefit by integrating relevant discussion on the supply chain into board deliberations whenever needed.

By having both supply chain excellence on the supply chain management team and on the board of directors, a company can be significantly more confident that gaps in important information of a strategic or tactical nature are less likely, that analysis and judgment are less prone to bias and error, and that investors’ and customers’ interests will be better safeguarded.