Agent or strategic partner?
It never ceases to amaze me how many supply chain managers downplay their own role without realising it. If you ask them what their department is all about, the almost reflexive response is: ‘We make sure the goods arrive on time.’ That is true. But it is also the easiest and weakest answer one can give, because it is incomplete.
With well-established processes and stable products, mere order fulfilment may suffice. Orders come in, goods go out, the key figures are in order. But as soon as the discussion turns to product range decisions, capacity investments or the question of what level of growth the company can actually afford, all too often there is no SCM representative at the table. Yet hardly any other function has such a comprehensive view of the operational side of the business. When I was head of SCM in a previous role, we always used to say that SCM is the ultimate interface function.
An anecdote from that time: I was responsible for the European supply chain back then and sat on the European board. Supply chain issues were rarely on the agenda there. Product availability was taken for granted. It was only when it wasn’t available that the pressure came, and I had to justify myself. SCM, like IT, was purely a hygiene factor. Not a motivator.
So what can a head of SCM do to ensure that this value contribution is actually recognised within the company? The first step is to speak the language of senior management: don’t place too much emphasis on delivery readiness and stock coverage, but rather on their impact on turnover, margins and cash flow.
The second: taking the initiative in strategic decision-making, rather than waiting to be asked. Anyone who takes the initiative to provide facts and scenarios when it comes to product range decisions or capacity planning will, at some point, automatically be invited to participate. The most effective lever, however, is a disciplined S&OP process. It brings sales, production, finance and SCM together in a structured manner every month, resulting in clear decisions rather than endless discussions. SCM facilitates and steers this process, thereby automatically placing itself at the heart of corporate management.
On top of that: make successes visible, even the small ones. Anyone who only reports when something goes wrong remains a firefighter. Anyone who highlights what has been avoided through good planning – stock-outs, express delivery charges, shortfalls – makes their own contribution tangible. And finally: forge alliances before you need them. Trust is not built during crisis meetings, but in the calm periods leading up to them. If SCM really is the ultimate interface function, then it is particularly important for the SCM manager to strengthen these interfaces through active internal networking.
And last but not least: develop the entire SCM team in this direction through training and a new mindset, because every individual is an ambassador for the whole department.
The transition from an operational role to a strategic one does not happen by itself, nor does it happen overnight. It requires perseverance and the willingness to brush off setbacks when, once again, a decision is made without SCM’s input. It is a longer journey than creating a better Excel spreadsheet or implementing a new planning system. But anyone who has travelled that path and suddenly finds themselves at the strategy table when it comes to product range, capacity or growth knows this: the effort is well worth it!
FAQ – Frequently Asked Questions
What role does supply chain management play within a company?
Supply chain management does more than simply ensure the availability of goods and the smooth running of operations. As a key interface function, SCM links, amongst other things, sales, production, procurement and finance, and can therefore make a significant contribution to strategic business decisions.
How is supply chain management evolving from an operational function to a strategic partner?
SCM becomes a strategic partner when it plays an active role in decisions regarding product range, capacity, growth and investment. It is crucial to translate operational key figures into their impact on turnover, margins, costs and cash flow.
Why is supply chain management important for corporate strategy?
Supply Chain Management provides a comprehensive overview of demand, stock levels, capacity, procurement and production. This enables SCM to identify at an early stage the impact that strategic decisions will have on delivery capability, costs, working capital and growth opportunities.
How can a supply chain manager demonstrate the value added by supply chain management?
An SCM manager should not merely communicate traditional key performance indicators such as delivery readiness or stock coverage. It is more effective to illustrate their financial impact on turnover, margins, cash flow and costs, and to highlight, for example, the stock-outs, shortfalls or express delivery costs that have been avoided.
What is the significance of S&OP for strategic supply chain management?
Sales & Operations Planning (S&OP) brings together sales, production, finance and supply chain management within a structured decision-making process. SCM can facilitate and steer this process, thereby positioning itself as a central function within the company’s operational and strategic management.
How can SCM play a greater role in strategic decision-making?
Supply chain managers should not wait to be invited to contribute to strategic decisions. By providing robust data, scenarios and recommendations for action regarding product ranges, capacity or growth plans, SCM can make a tangible contribution at an early stage.
Why is internal networking important for SCM managers?
Supply chain management operates at numerous points of interface within the organisation. Good relationships with sales, production, procurement, finance and senior management facilitate coordination and ensure that SCM is taken into account at an early stage when important decisions are being made.
What skills does a modern SCM team need?
In addition to specialist expertise in planning, scheduling and supply chain management, a modern SCM team increasingly requires analytical, communication and entrepreneurial skills. It is important to foster a mindset in which every team member sees themselves as an active contributor and ambassador for the SCM function.
