CIOs are the new stewards of the supply chain. Due to the growing digital footprint and impact of systems and architecture with business processes, their role has become more important than ever. Here are nine steps they can take to be successful:
1. Make time to manage both IT and the supply chain
CIOs juggle many different priorities and struggle to meet competitive demands
As IT and business processes become more and more interconnected, CIO's should contribute more to business strategy such as the supply chain. Many organisations have a centralised ‘Information’ function.
Enterprise resource platforms (ERPs) bring together the IT and business processes for a more succinct and efficient strategic execution.
Yet it's not easy, Thomas Conarty was forced into retirement because he tried to fulfill the role of both IT and supply chain head when he took charge of logistics at at Bethlehem Steel. After he left, his role was thereafter split into two.
2. Negotiate buy in
While the CIO can manage the supply chain, partnering is crucial. Information leaders need to think carefully about how their function supports the supply chain and ensure there is a structure in place to encourage collaboration. Managing the matrix of logistics, vendor relationship, IT and finance requires oversight and negotiation skills with functional managers.
3. Participate in the sales process
CIOs have not traditionally played a central role in sales, but there is a real opportunity for them to provide insight to the process to help ensure alignment across functions. The CIO's detachment from the day-to-day operations allows them to bring external perspective whilst they ensure everyone is in sync with objectives.
4. Own organisation’s data
Many companies rely on disparate data sources in multiple functional areas to operate. Through elimination of information silos from the business that present a single source of truth, CIOs can prevent information overload and confusion. While the ERP was designed to bring data sources together, data lakes present a massive problem - no reliable way to extract insights. IDC estimates that unstructured content accounts for 90 per cent of all digital data, much of which is locked away across a variety of data stores in different locations and in various formats.
5. Stay involved throughout the procurement spend cycle
Procurement go beyond budget responsibility as the “gatekeeper”. They prepare the business case for vendor engagement. Through the matrix of 'buy/build/invest/partner' they provide information to their partners in the supply chain about how to be more effective in making spend choices. CIO's as supply chain stewards can provide a lot of input especially around the investment life cycle. From contracting a service provider through to managing performance and KPIs, re-contracting or replacing the technology, they are very powerful as the chief owner of IT systems and the terabytes of data that is stored on process.
6. Focus the supply chain on the metrics that matter
Companies choose metrics and key performance indicators (KPIs) for the supply chain to deal with specific challenges and priorities. However, when there are too many different KPIs, the result can be confusion and lack of clarity around the real objectives of the organisation. This is true especially when those KPI's don't have external or aggregated industry input. CIOs can play an important role in identifying KPIs to the ones that matter. With a focus on a few metrics, companies are better able to provide clear direction and align the business behind the objectives and goals that matter.
7. Advise on centralisation of business functions
CIOs should advise on the right operating model for the supply chain, drawing on their own experiences of IT digital transformation. A more centralised model for functions, such as finance, HR and procurement, enables companies to achieve economies of scale. It also facilitates better collaboration by bringing together expertise in one place and leveraging it globally.
Shared service centres are an example of centralisation. Many organisations for example have an HR business partner and finance business partner who works across functions. Imagine if that was the case for procurement. While some organisations have procurement shared centres, they are the last ones to hear about an investment. In this sense, the supply chain CIO can unify all shared service centres. This will ensure real time communication save monumental costs.
8.Investigate the supply chain for risks
Most companies have a global complex supply chain that comprise secondary and tertiary layers. With operations far from a company’s direct control, it can be a challenge to identify exposures, understand and mitigate these risks. Working together with functional heads of the business, CIOs should focus on gaining visibility into secondary and tertiary layers of the supply chain and ensure they have appropriate control over their external partners.
9. Be proactive not reactive
We have all heard of the ‘fires’ that need to be put out on that long Friday. According to Forbes, CIOs in most companies are busy stomping out fires in the data centre, reactively. But today’s CIO needs to be more strategic and proactively work with the business to understand how IT can be an enabler. In that respect, the CIO needs to understand trends that can affect the business, be on top of the latest technologies disrupting the sector and offer those insights in board meetings. For survival in the increasingly digitised supply chain, today’s CIO needs to keep abreast of regulatory, environmental and financial forces that can drive change in their sector. While it is advisable to follow external events that affect the industry, internal workings of the organisation is crucial as well. This is where internal champions can make a huge difference. Such champions can be a direct hire or a mentee who has spent a considerable amount of time in the organisation, have built company credibility and is much closer to operations. This ensures that the CIO is not only armed with useful external information but also internal workings that ultimately can drive the revenue centre of the organisation.
Chaney Ojinnaka, CEO, VendorMach
Image Credit: Flexera