No surprise, cost cutting is number one focus, but mismatch with the CEO’s primary agenda stands out

SCDigest editorial staff

The News: Charter Consulting, supported by Professor Donald Eistenstein of the University of Chicago’s Graduate School of Business, reported its findings from a survey of CEO’s on their attitudes towards supply chain management.

The Impact: Perhaps not surprisingly, a huge preponderance of CEO stressed the importance of supply chain to their companies, and said the main focus of supply chain initiatives were to reduce costs. Yet, profitable growth remained at the top of the CEO agenda, and a minority of CEOs saw the real focus of supply chain to be there.

The Story: The report is based on a survey sent to some 500 Chicago area CEOs, though it’s not clear how many of them responded.

The CEO Perspective on Supply Chain Management report, which is concise and contains mostly graphics for a quick read, confirms the not surprising fact that most CEOs and companies primarily view supply chain initiatives as focused on cost reduction. As shown below, 82% of CEO respondents looked at supply chain management as primarily a cost cutting activity.

Source: Cutter Consulting report

However, as survey after survey has also show, the top priority of CEOs is  revenue improvement and profitable growth, and this survey showed the same result, with 75% of respondents focused more on top line growth more so than cost reduction at a company level.

Most CEOs are understandably focused on profitable top line growth, because in the end, that’s the only long-term path to increasing shareholder value. Yet, a distinct minority view the supply chain as having a key role in that effort.

Supply Chain Digest contributing editor Gene Tyndall has tackled this issue in his Viewing Supply Chains as Growth Levers  columns for SCDigest.

As usual, , virtually everyone sees themselves as “being above average,” a topic Supply Chain Digest editor Dan Gilmore commented on in his column on The 50% Problem. For example, 41% of respondents felt their supply chain projects were “sophisticated,” or in the top 20% of SCM efforts. You can bet 50% of those people are wrong. One area though were this wasn’t the case was in perceptions of collaboration effectiveness with vendors and suppliers – there, a spot-on 50% felt that their success had only been “average,” versus 39% who felt they were above average, and 7% who believed they were doing an excellent job in collaboration.

Recognizing the shift that has happened in the past few years in understanding about the keys to solving supply chain issues, 37% of respondents identified “Process” as the biggest barrier to supply chain management excellence, and 27% cited “People.” Only 16% cited technology as the main barrier.

Do these results surprise of the CEO supply chain theory surprise you in any way? Is supply chain management primarily a cost cutting function, or can it really drive the top line? Let us know your thoughts.

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