Supply chain is earning increasing recognition as a critical function that can drive competitive advantage. In fact, this magazine reported in early 2006 on a survey of nearly 500 CEOs at midsize and large enterprises that showed a whopping 93 percent of chief executives view supply chain management as critical or very critical to their companies' overall business strategies. Yet while 75 percent of the CEOs in the survey said that they are primarily focused on top-line growth, 82 percent said that their supply chains are focused on cost reduction. This misalignment of goals suggests a substantial disconnect between supply chain and the overall business.
One way to ensure that supply chain is aligning its goals with those of the broader business is to make certain that supply chain has a "seat at the table" with other senior executives from across the enterprise when strategic decisions are made affecting the company as a whole and supply chain in particular. To learn how the supply chain function at The Dow Chemical Company ensures its seat at the executive table, Supply & Demand Chain Executive recently spoke with Jim Varilek, vice president of supply chain for The Dow Chemical Company. Varilek assumed this position in February 2006, but he has been with Dow since 1982, and we started our conversation by asking about his background with the company.
Jim Varilek: My background primarily is on the business side. I started with the company in marketing and sales, then worked in marketing management and product management. At Dow in the late 1980s, product management was actually where a lot of the supply chain activity would reside, including the planning activity, inventory and logistics management, and so forth. I spent a number of years in our polyethylene business and then went on to our corporate strategic development area and did value-based management work. After that I went onto business director roles in our Epoxy business, general manager of our Advanced Electronic Materials business, and most recently into our Chlorinated Organics business. So stepping into running a function was something new for me.
Supply & Demand Chain Executive: Coming from the business side, what is it that you bring to the table in running the supply chain function?
Varilek: As a function, we're clearly driven by our corporate strategy. With my business background, we're tying together the activities of the function with the business strategy more closely. We're trying to get more business connectivity with the function. What I mean by "connectivity" is ensuring that we're talking the same language as the business. Sometimes, when we're talking in supply chain, whether it is about systems or rail car turns or services, we need to translate that into value contribution to the businesses, whether in terms of enabling growth or reducing cost or improving service. That's where I'm trying to take things.
S&DCE: How important is it in your view for supply chain to have a voice in the strategic planning process within Dow?
Varilek: It's absolutely important. At Dow, supply chain does have a "seat at the table" at both the business level and at the corporate level. In each of our businesses, we have multi-functional business management teams that include our business directors, marketing, manufacturing leaders and our business supply chain directors. As business strategy is developed, our expectation is that the business supply chain directors actually influence that strategy, bringing their expertise and the expertise of the supply chain function to the businesses to make sure that the strategy is effectively implemented.