SCDigest editorial staff

Paul Mathews, Senior VP of Supply Chain Transformation for The Limited Brands, gave attendees at the executive forum at the North American Material Handling Show an excellent presentation on how to better align supply chain management activities with CEO and boardroom level concerns.

The problem starts, Mathews noted, in part because most SCM professionals have developed their careers through a functional or engineering orientation. But that often means they lack the perspective, understanding or vocabulary to create that alignment.

“I’ve spent the past 25 years trying to find better ways to drive supply chain management into the boardroom,” Mathews noted.

  Paul Mathews, The Limited Brands

While SCM has not elevated to a corporate level concern in many companies, it should have, he said. Mathews quoted HP supply chain executive Dick Conrad, who has observed that supply chain not only consumes 65% or more of many companies’ revenues, but also directly impacts product price, quality, lead times, predictability and customer satisfaction.

Mathews said that now at The Limited Brands, SCM “not only is part of the corporate culture and boardroom, it drives a lot of our overall corporate strategy.”

He offered attendees a model of how evolving the traditional, functionally-oriented view of supply chain management first to a more customer, demand-centric model, and then ultimately to one that is truly aligned with the boardroom, changes the way SCM is viewed along key business dimensions.

Source: Paul Mathews, The Limited Brands

A key question, Mathews suggested, is whether a board member can easily connect with a line supply chain strategies and with the corporation’s overall agenda.

He noted just one example at The Limited Brands, where as with most retailers minimizing merchandise markdowns is a key corporate focus, given the impact on margins and profitability. “So we look at how supply chain can help to reduce store markdowns,” Mathews said. “This is an example of how we can have a revenue focus, not just a cost focus.”

He noted this customer and boardroom perspective can really change the way you view SCM opportunities and issues.

“Whenever we’re considering something, we take it all the way down to the customer. How does this impact the customer?” Mathews said.

“The same with shareholder value. How will these options impact shareholder value? That makes you think about a lot of other dimensions” than you would with a functional or cost-oriented approach, he observed.

“We need to better balance the tactical, engineering-oriented approaches we’ve used in supply chain with how to think at the board room level,” Mathews added. He said The Limited Brands is supporting this approach by purposely giving its supply chain and logistics professionals more abstract, business-oriented projects, rather than just those more geared towards traditional quantitative analysis. “Sometimes they struggle with those,” he said, because they require a different orientation and skill set.

At The Limited Brands, Mathews said, the CEO and board have three current priorities: optimizing multi-channel performance, being more customer-centric, and being highly efficient in all things. Those are now also the exact same priorities in the company’s supply chain group.

Do you agree or disagree with Mathews’ perspective? How can we get better alignment between SCM and the boardroom? Or, is it mostly about costs in the end, really? Let us know your thoughts.