Supply chains are at a state of upheaval that bears no likeness to any scenario witnessed over the last century. The volatility is everywhere – be it the supply and demand of certain products within a supply chain, or in available freight capacity and volume flowing across the globe.
Over the years, sourcing patterns within supply chains suggest that stakeholders often look to procure products – whether raw materials or finished goods – at the cheapest available price, rather than looking to diversify sourcing. A major part of the North American retail industry consists of companies that source products globally.
Sourcing operations within these businesses are usually overarchingly dependent on specific nations spread across the Asia-Pacific region. An increasing number of companies are now finding it difficult to keep their inventories flowing like before – due to supply chain disruptions caused by the COVID-19 pandemic, as well as non-diversified sourcing operations.
Though no single segment within a retail company is at fault for this disruption, such situations shed light on the growing need for creating the role of a chief supply chain officer (CSCO) within organizations that have complicated sourcing and distribution operations. FreightWaves spoke with Krish Iyer, the director of strategic partnerships at ShipStation, to understand why investing in a CSCO is vital for a retailer.
“I’d say supply chains are a lot like modern art. Everyone has a different opinion on exactly what it is, and many times you don’t quite know what it is until you see it. Often when you say the words ‘supply chain,’ you may conflate the idea of shipping. But in reality, the supply chain itself is just so much more upstream than the final-mile of the shipment to the end consumer,” said Iyer.
Though logistics operations are now prioritizing end consumers and associated last-mile delivery more often than before, the health of a supply chain depends equally on its suppliers, vendors, and first- and mid-mile haulers operating within the ecosystem. Iyer explained that a CSCO is essential to stitch together different logistics operations and manage the supply chain as an independent practice within the organization.
“Many people don’t understand the real touchpoints of a supply chain. So they tend to slot it under areas like finance or procurement or operations. Now the mindset is evolving because there’s more visibility into organizations,” said Iyer.
Iyer explained that for an ecommerce retailer, the objective is to meet customer demand in a timely fashion that matches whatever the customer promise was. Iyer argued that a CSCO would be best-suited for meeting that objective, as that person would have a cross-functional relationship with different departments like marketing, sales, finance and accounting. In the absence of a CSCO, these departments would largely work in silos, with no transparency into operations.
“It is essential to have interpersonal relationships for improved visibility into an organization. A CSCO can understand the real outcomes and measurable goals for each department, and can thus determine proper goals based on the competing needs for different functional groups,” said Iyer.
Departments within a company failing to interact properly can lead to disastrous consequences. For instance, if the marketing team of an ecommerce firm sends out a promotion that cannot be upheld by the operations team, it might result in unsatisfied and frustrated end customers – hurting the company’s brand value. A CSCO would put an end to such incidents from happening.
“COVID-19 highlights why there’s a crucial need for organizations to look at having a CSCO. A CSCO has a 360-degree view around an organization and has developed a lot of battle scars from working with those different cross-functional groups to give them that view,” said Iyer.