{"id":3849,"date":"2008-06-23T11:05:00","date_gmt":"2008-06-23T11:05:00","guid":{"rendered":"https:\/\/www.thirdeyesight.in\/?p=3849"},"modified":"2022-11-04T10:53:12","modified_gmt":"2022-11-04T10:53:12","slug":"executive-involvement","status":"publish","type":"post","link":"https:\/\/myechoproject.com\/TES\/executive-involvement\/","title":{"rendered":"Executive Involvement"},"content":{"rendered":"\n\n

Written By Rajendra Choudhary<\/a><\/p>\n

Senior executive’s outlook towards supply chain tends to differ considerably from that\nof supply chain manager’s. While SCM professionals concerns are usually operati,onal\nand immediate in nature, senior executives prefer looking at the slightly distant sup\u0002ply chain objectives. The increasing realization of supply chain’s strategic re,levance is\nprompting senior executives to increase their involvement in the supply chain affa,irs of\nthe organization albeit at a macro level.\n<\/b><\/p>\n

In the recent years, the scope of\nmodern supply chain has expanded\ngreatly. From its earlier definition\nwhich was more or less restricted to\nthe movement of goods, warehous\u0002ing, and distribution, it has now widened\nto include everything from planning and\nproduct design right through to providing\nservices to end customers. Also, unlike\nin the past where different supply chain components functioned in silos as dis\u0002parate units, organizations nowadays ar~\nincreasingly trying to bring them together\nand look at them as part of one single\nchain. Though, this view of supply chain\ncan result in better governance, visibility\nand greater accountability; while attempt\u0002ing this, organizations are often left with a\nhost of interfacing supply chain functions\nand integration issues. The lower level executives or operations dnision respon\u0002sible for various functions neither posses\nthe organizational 3dboriq’ nor the vision\nto address these conccms beyond a point.\nTo complicate matters even further,\nthere’s the cross-functional relationship\nwith organizations such as sales, market\u0002ing, finance etc. that hm’e their own sets\nof priorities.
\nContrary to sales and marketing man- gers, supply chain managers are the\noperational experts working in the ‘shad\u0002ows’. While sales and marketing functions\nfocus on how best to serve the customer\nby offering new products or services, it is\nleft to the supply chain manager to facili\u0002tate the same while performing a balanc\u0002ing act between the time-to-delivery and\ncost-to-serve the customer.
\n\n\n\nThere are other occasions when sales’\nand supply chain’s paths cross frequently.\nFor example, when sales insists on greater\nproduct variations and shorter production\nruns because of constantly changing mar\u0002ket dynamics whereas production would\nwant the exact opposite. Merchandising\nmight ask for frequent product introduc\u0002tions and .smaller shipments, whereas it\nmight not make sense to logistics because\nit could increase the cost-to-serve.
\nSuch instances require people with\norganizational authority to effectively\nmanage these relationships. Senior man\u0002agement personnel such as the chief\nexecutive officer (CEO), chief operating\nofficer (COO) or the chief finance officer\n(CFO) wield the powers needed t@con\u0002figure these relationships and take cor\u0002rective actions wherever required. Given\nthis, the criticality of executive participa\u0002tion becomes rather obvious in the supply\nchain context.
\n\n\n\nAnother reason why supply chains are\ndemanding executive attention is because\nthey are starting to playa significant role\nin determining the competitive edge and\nprofitability of organizations. While the\ntwo factors aren’t the prerogatives of the\nsupply chain solely, and other functions such as sales and marketing are also\nequally important, the overall health of\nsupply chain is fast becoming a differen\u0002tiator for a company’s success.
\n“Supply chain plays a crucial role in two\nkey aspects of any business-the operating\nefficiency and cost when it comes to profit\nand loss. Competitive advantage is still a\ndirect result of the operating efficiency\nof the supply chain and responsiveness\nof the production and distribution pro\u0002cesses,” opines Oeepak Kaushal, project\nhead (SCM), AFL. “As far as cost is con\u0002cerned, supply chain presents the biggest\nscope for reducing expenses. Of course,\nthere are other avenues where it’s possible\nto cut down costs, but overall, when you\nlook at supply chain, starting from plan\u0002ning till the positioning of the product in\nthe marketplace, it is the biggest spend for organizations. As these issues are of\nstrategic importance to a business, it only\nmakes sense to have senior management\nand CEO level involvement.”
\nC-CLASS THINKS DIFFERENTLY<\/b>
\nThe C-class’ attitude towards supply\nchain tends to differ greatly than their\noperational colleagues, consequently\nthey behave differently when it comes to\nidentifying areas of concern and resolv\u0002ing issues. For instance, when trying to\ncut costs and optimize logistics expenses,\noperations personnel will probably look at\nconsolidating shipments or reducing the\namount of air being shipped in the boxes\nor they’ll evaluate alternative modes of\ntransport. However, a COO or a CFO may\nnot necessarily limit his focus to smaller operational changes. They will look at\nthe overall supply chain from a holistic\nperspective and scope out opportunities\nfor introducing changes that could have\ngreater strategic impact on the supply\nchain operations, sometimes even chang\u0002ing its fundamental structure.
\nWhen an international retailer asked its\nCOO about what changes can be intro\u0002duced to improve the profitability and\nmarket competitiveness over a three year\nhorizon, the COO responded by intro\u0002ducing greater focus on supply chain and\nbenchmarking initiatives. Instead of con\u0002centrating on reducing costs, he looked\nfor ways to improve margins.
\nInitially, the company was focusing\nmainly on reducing logistics costs and in\ntwo year’s time it saw $11 million come\nthrough some buying structure changes and another $3 million from consolidating\nvolumes into fewer vendors. The follow\u0002ing year it witnessed another million dol\u0002lars coming its way from logistics and $6\nmillion from buying structure changes. In\nthat same year, however, the company wit\u0002nessed $130 million come through prod\u0002uct development process changes.
\n“This is what an executive involvement\ncan result in. Essentially any C- level per-\n..son, be it a CEO or COO or a CFO, their\ninvolvement with supply chain is about\nhow they can bring in structural changes\nthat drive out inefficiencies and place\nthem in a better competitive position,”\nsays Oevangshu Outta, Chief Executive,\nThird Eyesight.
\nWhile the arguments made above sup\u0002port the cause of senior managemen nvolvement in supply chain affairs, it\nshouldn’t at any juncture be forgotten\nthat though supply chains are a strategic\nenabler and can act as a differentiator in\ntoday’s business, it’s not the job of a CEO\nto run the supply chain of a company.
\n“It obviously helps if the CEO can look\ninto the supply chain on a consistent basis\nand address arising issues, but he doesn’t\nneed to devote extra special attention to\nthe supply chain operations,” dpines C\nDevadas Nair, Customer Care Associate\n& Head Supply Chain & Mission Control,\nShoppers’Stop. “Rather a CEO’s role in\nthe supply chain should be of a person\nwho provides direction to the supply chain\nand where it’s headed at a strategic level.\nOperational or tactical issues at the micro\nlevel shouldn’t be his concern, especially\nwhen there are operational heads looking.\n\n\n\nafter and working out the nitty-gritties.”
\nEXAMINING CEO’S INVOLVEMENT<\/b>
\nIN THE SUPPLY CHAIN\nSO just how deeply engaged do Indian\nCEOs tend to be in the supply chain\nmatters?
\nWell, at least for a good number of\nIndian CEOs their involvement with the\nsupply chain appears to be direct and fairly\nregular as per their respective internal\narrangements. At Acer’s fortnightly plan\u0002ning meetings the managing director is a\npermanent fixture. In addition to the MD,\nthe party comprises of the sales head, the\nmarketing head, the supply chain head\nand his team from the operations side.
\nThese meetings are convened primarily\nto assess inventory status-inventory held \n\n\n\nat distributor and reseller level, inventory\nin hand, material requirements, new prod\u0002uct introductions, their configurations etc.\nand plan for the upcoming weeks. By its\nown admission the company is very con\u0002scious about its inventory, and so it occu\u0002pies a considerable amount of time.
\n“Our internal systems and processes\nare such that we monitor inventory almost\non a daily basis, not just at our level but\nalso at the MD’s level. He likes to keep a\ntab on the stock levels, whether it is high\nor low, based on which we decide whether\nto push for sales or provision for additional\nmaterial. This is done almost three-four times a week and seen at the MD’s level,”\ninforms Sudhir Goel, chief officer, supply\nchain, Acer India.
\nAlthough it’s difficult to generalize spe\u0002cific supply chain interest areas, as they\ntend to vary from company to company,\nIndian CEO’s primary concerns tend to\nrevolve around inventory, procurement and logistics. This is primarily because\ncost of running a profitable organization\nhas gone up significantly in recent years\nand supply chain components such as\nthese tend to tie up a sizable amount of\nworking capital and stand out on the bal\u0002ance sheet.
\n\n\nCEO’s ~-ebadtobecome more mind\u0002ful of inventory and pun:hasing because\nthe seDer’s marld era has long since\nended. No more can companies afford\nto simply ~ production and pass\non the inefficiencies to the consumer via\nhigher prices. So they bave no choice but\nto cut costs and supply chains present an\nopportunity hI doingjust that.\n“lncreasing(~.”lod:ihoo.. constant stress\non growth and tighter- equity markets are\njust some of reasom dining CEOs and\nsenior management to ::oak at the supply\nchain as an area that om provide them\nwith more visibi!ity intc the operational\nworking capitalw iofmms ;\\jari Viswana\u0002than, Research ~ Supply Chain\nManagement, AbenIeeo Group.
\nAlso, inherendJ. CEOs are a breed that\nevaluates every ~ of the business in\nterms of cost and pmfitability. So when,it\ncomes to supply cbain they tend to asses\nstrategic and 6na:ociaJ feasibility of a cer\u0002tain initiative purdy in tenns of cost.
\nAnother indicator of extent of senior\nmanagement involvement could be their\nparticipation in matters that can poten\u0002tially have significant bearing on either the\noverall supply chain or its components. For\nexample, it is not uncommon for senior\nexecutives, at times even CEOs to person\u0002ally engage in talks in the later stages of <\/p>\n\n\n\n

Source: LOGISTICS MANAGEMENT<\/a><\/p>\n\n