The main objective for a chief supply chain officer has long been to bring cost savings in supply chain, logistics, warehouse and manufacturing with the key objectives being reduction of lead times, leaner processes, higher staff efficiency and lately collaboration with suppliers. The combination of the recent downturn as well as marketplace competitive strategies has started changing rather adding upto the key objectives of a chief supply chain officer, like acting as a facilitator for added ability to differentiate in customer service, marketing strategy etc. A CSCO is also seen to be managing risks around supply chain like risks related to trade compliance, raw materials, demand fluctuations, product quality, financial instability, risk profile of suppliers and customers, currency volatility, catastrophic events, logistics capacity and congestion, supply chain security, and environmental disasters etc. With this, the CSCO has become a key stakeholder in the organization and is responsible for growth and expansion too in addition of improving efficiencies and coming out with innovative cost reduction measures beyond low cost sourcing and other similar strategies.
These changes though, are not there in all organizations and in these organizations where the role of CSCO is still evolving and is largely seen as a cost center rather than a profit center or an engine for growth in revenues, the key objectives of a chief supply chain officer remain as:
- Inventory reduction / optimization
- Improvement in efficiencies by restructuring and automating supply chain
- Improved service levels
- Deflation in procurement costs
- Releasing working capital
- Reduce cash to cash cycle
- Improved financial arrangements with customers and suppliers (largely payment terms)
- Reduced lead times of procurement and manufacturing
- Improved visibility of supply chain metrics, data, disruptions etc.
With enhancement in the role of the CSCO, the best in class organizations are leveraging their enhanced visibility into supply chain processes to make their supply chains more agile: if the market demands, they are able to change the direction of their shipment not just during the scheduling process, but at later points in the supply chain – after the cargo has been shipped (visibility). Best-in-Class organizations are also are much more likely to perform various kinds of data analysis in support of supply chain decisions which ensures that the visibility data they collect are used to help them achieve the market advantage (responsiveness).
Many organizations do not even have the role of CSCO today but these organizations have started clearly seeing the benefits of centralizing supply chain operations, and to make SCM truly strategic, a strong leader as a CSCO will be a critical differentiator. No longer can organizations run different supply chains for different products within the same business units. Consolidation and rationalization of business processes within supply chain organizations is a reality that has to be embraced. So, they have realized that having a CSCO role orchestrate the supply chain across these different business units is a key requirement.
In nutshell, the role of CSCO is evolving wherever it exists today and it is being introduced where it is not there currently. Infact, it has become one of the key differentiators for a company to increase not just the bottom-line but also to establish them as the market leaders in managing complex supply chains too.