From the backroom to the boardroom: the rise of the Chief SCM Officer

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DouglasBoateng_100.jpgGlobal directional-level corporate and policy decision-making corridors are going through unprecedented changes. These dramatic shifts have been largely influenced by the increasing importance that boardroom executives attach to supply chain management.

Today, the skills and knowledge of supply chain management professionals are increasingly being utilised, with forward-thinking executives and policy makers now officially accepting the Chief Supply Chain Management Officer as a member of the C-suite.

Drawing on a sample of international organisations, including Fortune 1000, FSTE 250 and JSE 100 companies, as well as public-sector organisations with a combined revenue or spend of well over a trillion USD, the study by Professor Douglas Boateng [1] examined directors' understanding of the strategic importance of supply chain management and, in particular, the increasing boardroom role of the Chief Supply Chain Management Officer.

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C-suite executives that participated in the longitudinal study included CEOs, CFOs, COOs, directors and officers from manufacturing and production, mining and resources, food and beverage, government, agriculture, logistics and public-sector organisations.

The Chief Supply Chain Management Officer
The Chief Supply Chain Management Officer, who often takes responsibility for functions such as procurement, logistics, customer service and operations, is known to possess the tools needed to innovatively lead value-driven initiatives across such functions as well as within business units and across broader value chains.

With such sought-after skills, it is not surprising that 48% of the abovementioned research study's respondents agreed that the Chief Supply Chain Management Officer will become a standard C-suite role within the next ten years.

According to the study, well-crafted supply chain management strategies are considered to be most critical for, among other things, long-term wealth creation, small business development, government service delivery quality, industrialisation, national economic development and job creation.

In terms of wealth creation, 70% of global executives that participated in the study saw supply chain management and procurement as aspects that they considered to be crucial for long-term wealth creation.

In addition to this, 64% and 66% of executives agreed that supply chain management and associated procurement aspects have a direct impact on small business development and job creation respectively.

This emerges as particularly significant when compared to the percentages received for perception of logistics' and finance's impact on small business development, which came in at 6% and 12% respectively.

Growing recognition of the supply chain
In relation to complex supply chains, such as government, where service delivery quality is critical for value creation, 34% of global respondents viewed the supply chain management function as essential to the success of quality service delivery. This is an increase of 19% over a four-year period.

This significant increase highlights growing recognition that the supply chain should no longer be viewed in terms of 'cost of ownership' but should rather be regarded in terms of its overall impact on business and society.

Such support for the role of supply chain management in the successful realisation of public-sector services and initiatives can further be seen in various governments' active use of supply chain management to not only improve public-sector governance and delivery, but also to add more value to resources, stimulate SMME growth and create sustainable jobs.

In terms of the C-suite executive having the dual responsibility of directing acquisitions and payments, 86% of global executives saw this as creating ethical and conflict of interest challenges. Although there seems to be general consensus, the 14% increase over a four-year period clearly indicates that there are concerns among C-suite members.

Finally, when it comes to the impact of supply chain management on industrialisation and national economic development, the study found that 68% of global executives supported supply chain management and procurement as having direct impact on industrialisation and national economic development.

C-suite transformation
Based on these statistics, it is evident that supply chain management has emerged as a prominent topic on both public and private organisations' strategic agendas and dramatic shifts in director-level perceptions relating to the role of the Chief Supply Chain Management Officer in organisational decision-making is leading to the transformation of the C-suite.

Additionally, clear recognition by director-level executives in terms of the increasingly important role that supply chain management occupies in the overall organisational environment, highlights the growing influence that the Chief Supply Chain Management Officer will come to exert in the boardroom and policy-making corridors.

The findings clearly support Groysberg, Kelly and Macdonald changing C-suite assertions in the Harvard Business Review, March 2011 [2].

Professor Douglas Boateng is an International Professional Director, an Adjunct Academic, a Fellow of the UK Institute of Directors, Africa's first-ever appointed Professor Extraordinarius for Supply and Value Chain Management and CEO of PanAvest International and Partners. Professor Boateng has been publicly acknowledged by the Commonwealth Business Council for his contribution towards international supply chain management and emerging world long-term economic development.

[1] Boateng, D. (2015) Gauging director-level perceptivities on aspects of supply chain management - a global longitudinal study.
[2] Groysberg, B., Kelly, K. & Macdonald, B. (2011) The new path to the C-suite. Harvard Business Review, March 2011.

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