By Neil Humphreys, partner at executive search firm Howgate Sable.

Supply chain is the digital and organisational nervous system of any manufacturing or distributing business, the repository of data which allows the value chain to make decisions and operate effectively. Recent developments in technology are having a dramatic effect on how cutting edge organisations operate, ‘robotisation’ of the function with machine learning and AI coming to the fore appears an unstoppable force.

It’s little wonder, then, that supply chain leadership has evolved to become a key part of management. It holds the ability to forecast business performance, enabling smart, data-led decisions at an operational and enterprise level,

Disruption within the supply chain can be catastrophic – as evidenced by global challenges during the pandemic and beyond. Excellence in supply chain management means understanding the various moving parts that combine to create a value chain and being able to anticipate disruption and respond quickly. Visibility is the key to this.

Connectivity is crucial to aiding visibility, but there are still many businesses which are slow to adopt automated processes in supply chain management. In my career in a leading executive search firm, I have worked with many businesses looking for increased agility and visibility in their supply chain. They require leaders with the skills, foresight and understanding to allow for effective supply chain leadership, coupled with the soft skills to work across the functional matrix; the IBP / S&OP processes aligned with finance and commercial functions is a perfect example.

A pressing need

Matthew Spooner was VP of supply chain at Swedish-Swiss multinational firm ABB, and before that, a subject matter expert for Gartner in S&OP and demand driven networks. “The trend towards increased automation in supply chain has been slowly growing over the last decade or so, but the need for this level of technology adoption was crystallised by the pandemic,” he told me. “The pressures caused by the pandemic highlighted the lack of visibility of many top tier suppliers and caused a crisis in supply chains the world over.

“Organisations that were already mature in their supply chain automation and had invested in visibility saw markedly less disruption, and had a better pandemic experience as a result,” he added. Spooner estimates that around 70 per cent of businesses globally are at a low maturity level when it comes to supply chain automation – only five per cent are considered to be at the pinnacle; businesses like Apple and Amazon. These are moving beyond the ‘standard’ levels of automation which encompass elements like packaging and moving towards greater use of robotics, drone technology, AI and machine learning to both lower the cost of operations and increase accuracy.

Global business approach

One really interesting trend is the move towards decentralisation, which is causing businesses to establish a global approach to supply chain management. As businesses seek to professionalise their international dealings, many are opting to standardise their operations in various territories and supply chain is no exception.

Spooner commented: “As businesses are demanding that all locations operate the same processes and approach, automation becomes the natural next step. Certain geographies are already ahead. China, for example, is investing in world-class systems. So, too, are the Emirates and areas of Europe. Interestingly, America can fall behind in automation progression but this is generally because American businesses haven’t typically needed to go outside of their own country for supplies before. As they become more internationally minded, this is changing,” he added.

The challenge of leadership

Communication and networking skills have always been critical to the success of a supply chain leader. Beyond technical competence, the emotional intelligence to work throughout a matrix with different functional agendas and inevitable politics is key. Supply chain, with finance, can lead through creation of a single source of inalienable data which can be trusted to guide decisions and mitigate risks.

Recently, clients of mine have been seeking a similar profile irrelevant of industry: people who understand data, follow technology, have the business acumen to link these to commercial success – and, crucially, can convince a Board of the importance of investment. It is a fine balance of skills and one which can be rare.

Spooner is a vocal advocate of supply chain management as a Board discipline: “It is absolutely vital that the entire senior team understands how vital supply chain is and recognise the importance of investing in it. Financing developments in automation can give a business a sharp competitive edge – it cannot be an afterthought or left to one team. It’s imperative that it is part of every business’ long-term plan and that supply chain has a compelling presence in the Boardroom.”

Currently, only around 30 to 40 per cent of Fortune 500 businesses have a head of supply chain position on their Board. The scope for growth here is vast and savvy businesses must invest in supply chain development, technology and automation now if they want to thrive in future.

As Spooner predicts, the future will look very different for those who invest now versus those who don’t: “In 10, 15, 20 years’ time, the high performing companies will look very different and they will have the ability to monopolise their markets thanks to their clear understanding of their supply chain and their accuracy and agility in monitoring and responding to it. Few businesses can afford to be without this.”