Lawsuits involving supply chain executives have become increasingly frequent, including Amazon suing Arthur Valdez, who left to work as Target’s chief supply chain and logistics officer, and an XPO Logistics suit against LTL rival YRC Freight.
Mega-retailers and manufacturers today realize the value of having top-notch supply chain management executives within their ranks as important problem-solvers and facilitators to improve bottom lines.
In recent years, many large corporations have even made space in their “C” suites for leading supply chain officers to be a part of their strategic decision-making teams. The job prospects and financial rewards for these specialized executives have never been better.
However, the deep-dive level of information that supply chain executives possess about a company also make their employers extremely nervous when they leave for greener pastures.
Such is the recent case involving Arthur Valdez, a 16-year veteran of Amazon who was most recently the on-line retail giant’s vice president of operations with a focus on supply chain management. In March, he was hired as the executive vice president and chief supply chain and logistics officer at Target Corp.
“While we’ve made significant progress in improving our operations, Target’s growth hinges on our ability to enhance the fundamental aspects of our business, starting with the supply chain,” Target’s executive vice president and chief operating officer, John Mulligan, said of Valdez’s appointment.
Amazon responded by filing a lawsuit against Valdez on March 21, alleging he violated his 18-month non-compete agreement when he joined Target. According to its lawsuit, which was first reported by the Wall Street Journal, Amazon was concerned that “the disclosure and use of Amazon’s confidential and proprietary information” [in this case about its current and future delivery service plans] would be used to “Amazon’s detriment and Target’s advantage.”
However, while Target has acknowledged its interest in boosting online services, its model will likely never come close to matching Amazon’s online prowess.
Lawsuits involving executive swaps have also been seen between rival freight transportation providers. In late January, XPO Logistics filed a suit, claiming it suffered “irreparable harm” from the loss of trade secrets when two former Con-way Freight executives joined less-than-truckload carrier YRC Freight in the aftermath of XPO’s takeover of Con-way. Ironically, XPO is still fending off a similar lawsuit filed against it by C.H. Robinson in 2012.
Another interesting detail from Amazon’s lawsuit was Valdez’s salary, which was in excess of $1 million a year. While chief executive officers at many large corporations undoubtedly make more, Valdez’s former Amazon salary is nothing to sneeze at, and surely he’s making a similar amount, if not more, as chief supply chain officer at Target.
While Valdez’s compensation is certainly on the high end of the scale, Salary.com pegs the median annual salary for today’s top supply chain management executive at nearly $230,000. Again, not bad for this still very much up-and-coming field. What was once a skill set learned on the job, more and more universities have added “supply chain management” among their Bachelor’s and Master’s degree programs with this trend in mind. With the increasing inclusion of information technology, the supply chain profession will become that much more important in the business world.
In the future, shippers — both importers and exporters — will find themselves paying bigger salaries to recruit, develop and retain supply chain professionals to ensure their businesses run smoothly and competitively from the point of ordering inputs for manufacturing, all the way through to delivering finished products to the consumer.
Editorial: Coveted and feared supply chain executives
