Why CEOs Should be Involved in Supply Chain Management

All too often, the gulf between the CEO and the company’s supply chain is very wide. Upper management may, for example, have no idea how your company obtains its mixed-signal integrated circuits, microcontrollers, sensors, oscillators and other items such as Silicon Labs products.

Why CEOs Should be Involved in Supply Chain Management
Why CEOs Should be Involved in Supply Chain Management

Why CEOs Should be Involved in Supply Chain Management

They may have only a passing acquaintance with your third- and fourth-party suppliers and logistics teams. In many cases, it is only when a crisis arises that your CEO is brought into the inner circle.

The drawbacks of silos

If information is compartmentalized, it is by definition kept boxed off from others. In order for a CEO to truly be at the helm of a company, that person needs to understand how the products that are the business’s lifeblood are made and distributed to end users.

If upper management is ignorant of these valuable facts, they will certainly be ill-prepared to navigate the organization through a major disaster.

Critical elements of supply chain management that every CEO should know

An informed CEO is a strong and effective leader. Focusing on these questions can help to bring the penthouse suite and the supply chain closer together:

  • In what ways has the supply chain been developed to meet the company’s strategic needs?
  • Is your supply chain management team qualified to do the job?
  • Are your supply chain goals aligned with your business strategy, with a focus on effectiveness, efficiency and value creation?
  • What metrics is your company using to gauge success, and what incentives are in place to encourage collaboration among all stakeholders?
  • Is quality a priority in your supply chain? To that end, does your infrastructure emphasize standardized processes, supplier performance management strategies, focusing on continuous improvement initiatives, proactive supply chain risk assessment and mitigation and automation of processes?
  • Is your supply chain efficient? This involves distribution network optimization, supply chain visibility, safety and whether suppliers are chosen according to the value they can bring or according to their cost.

Of course, it never should be the CEO’s job to micromanage every aspect of raw materials and components procurement and delivery. However, once a CEO gains access to the answers to these important questions, the stage will be set for transparency and collaboration.

There is an old saying that knowledge is power, and it certainly applies in this case. When a CEO is knowledgeable about the strengths, weaknesses, threats, opportunities and operations of their company’s supply network, his or her ability to lead will be enhanced.

As a result, the management team can be inspired to overcome inertia and spearhead the positive change and flexibility that are the hallmarks of today’s most successful companies.

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