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'Supply Chain' finally wins its place at head of the Board
Many companies view their supply chain capabilities as a key differentiator in the marketplace. Companies such as Apple, Hershey's and Wal-Mart, have all proven quite successful in their particular vertical sectors by placing a greater emphasis on supply chain at the senior level of their organisation. In fact, increasingly, companies are looking for potential candidates with supply chain knowledge to fill the role as CEO.
Perhaps the best example is that of Apple's recently appointed CEO, Tim Cook (pictured). In 1998, Apple was still running its own factories in California, Ireland and Singapore. While more profitable and efficient companies like Dell had moved to a just-in-time manufacturing model, Apple still held 90 days of inventory. Cook closed Apple's factories and outsourced all manufacturing to a network of suppliers in Asia. Inventories decreased to 60 days, then to 30 days, then to the just-in-time model. Cook's supply chain strategies have revolved around reducing inventory levels to increase margins. He's been able to do this by pulling Apple out of the manufacturing business and choosing to invest its capital on manufacturing partners, who in turn give Apple exclusive deals for the best electronic components. Analysts credit Cook's efforts on the production end as the key difference in turning Apple's fortunes around.
In May, Hershey promoted supply chain chief, John Bilbrey, to interim CEO. According to the company's press release, "Bilbrey played a key role in the company's turnaround as well as in the creation and implementation of the company's confectionery demand landscape and establishment of Hershey's presence in markets around the world."
Finally, Wal-Mart revolutionised the retail industry by placing a strong emphasis on supply chain. One of the earliest to embrace supply chain techniques, Wal-Mart became amongst the most profitable companies in the world. Through its pioneering techniques in outsourcing, supplier management and inventory management, the company is considered a model to many companies, not just in the retail industry.
Indeed, supply chain management is increasingly being aligned with business strategy in order for companies to remain competitive and profitable. Given the complexities in supply chain relationships, not to mention the difficulty of streamlining the supply chain in a global economy, a larger focus on supply chain management is becoming a necessity. Companies are realising the significance of having a senior level, particularly a CEO, which is able to understand and respond to necessary changes within the company's supply chain in order to remain not only competitive but profitable.
Source: Transport Intelligence