As the pandemic moves further into the rearview mirror, supply chain executives are losing the strategic gains they made with their c-suite counterparts. Case in point: 88% of c-suites reportedly still see the supply chain as a cost center, rather than a strategic growth driver. Further complicating matters, c-suite leaders often prioritize short-term financial results over long-term strategic planning– leading to underinvestment in initiatives that drive sustained growth, according to a report from McKinsey.
Yet, last year nearly half of supply chain leaders that increased their investment in supply chain innovation saw $1million in revenue growth. This knowledge gap spotlights an antiquated, pre-pandemic perspective that poses a significant risk to business’s bottom lines, particularly as disruptions continue to plague the industry leading up to the peak holiday retail season. So, how can supply chain leaders effectively communicate the value of strategic supply chain operations to their c-suite? Let’s dive in.
What’s Creating the Divide?
All businesses need a strong supply chain to ensure the goods they want to sell a redelivered-on time, in perfect condition, and at a competitive price. Yet, the supply chain is a complicated system with many players, each with its own goals and strategies. Every step in the production process— from sourcing the materials to shipping products to customers—is handled by a dedicated group of people or systems. Because of this complexity, it can sometimes be difficult for c-suites, who are more removed from the day-to-day, to have a complete view into a supply chain’s ROI. During the pandemic, when the world was fully remote and online shopping skyrocketed, the need for a streamlined supply chain became common knowledge. But as the world slowly returns to normal, that demand is fading from memory: 78% of supply chain leaders say their organization is back to focusing on supply chain cost management post-pandemic, with 28% citing cost reduction as one of the top three priorities currently– a shift from pandemic-era strategies. As a result, the onus often falls onto supply chain management to clearly and effectively communicate the value of an innovative supply chain.
How to Walk the Walk and Talk the Talk
While the value of supply chain innovation can significantly impact an organization’s bottom line, it’s not always immediately clear to executives, who may not be well-versed in supply chain dynamics. To bridge this gap, supply chain leaders must craft compelling narratives that align supply chain innovations with overarching business goals:
- Align Innovation with Business Strategy: Supply chain leaders must begin by framing innovation within the broader context of the company’s strategic goals. C-suite executives are primarily focused on high-level outcomes—growth, profitability, customer satisfaction, and risk management. Supply chain innovations should be presented as enablers of these objectives. For example, an innovation in predictive analytics for inventory management can reduce stockouts and overstocks, which directly impacts revenue generation and customer satisfaction. Similarly, implementing new technologies like artificial intelligence (AI) for real-time tracking can enhance operational efficiency, which leads to cost savings and better decision-making. By clearly linking innovation initiatives to business outcomes such as revenue growth, improved profit margins, or better customer experiences, supply chain leaders can demonstrate the tangible impact of these innovations on the company’s overall success.
- Use Data and Metrics: C-suite executives are data-driven decision-makers, and providing solid evidence of potential ROI is key to securing their buy-in. Supply chain leaders should use data and analytics to back up their arguments. This includes presenting case studies, industry benchmarks, and internal performance metrics that's how the potential improvements from a given innovation. For instance, if a new supply chain management software could improve forecasting accuracy, the supply chain leader should show how more accurate forecasts will lead to reduced inventory holding costs, fewer stockouts, and better demand planning. Using data-driven insights, companies can demonstrate how innovation could solve specific pain points and capitalize on new opportunities to resonate with their executives. Providing a clear ROI calculation, as well as outlining both short-term and long-term benefits, helps make a more compelling case.
- Communicate in Terms of Value, Not Technology: It’s important for supply chain leaders to avoid getting too bogged down in the technicalities of innovation. While the C-suite may not be experts in logistics software or machine learning, they are experts in business outcomes. Therefore, supply chain leaders should focus on the value these innovations bring to the business. Rather thanemphasizingthespecificsofthetechnologyorthetechnicaldetailsofanew supply chain process, leaders could communicate how innovation will improve the company’s performance in terms of speed, flexibility, customer satisfaction, and cost-effectiveness. Using straightforward language and focusing on business results, rather than technology jargon, makes it easier for executives to understand and appreciate the value of the proposed changes.
Flipping the Narrative: From Cost Center to Growth Driver
To successfully communicate the value of supply chain innovation to the c-suite, supply chain leaders must frame their initiatives within the context of business outcomes, using data to demonstrate potential ROI. By speaking the language and focusing on tangible business results, supply chain leaders can gain executive support for innovations that will drive growth and profitability, making supply chain innovation a core component of the company's strategic vision. In turn, once c-suite leaders are able to recognize the true potential of an innovative supply chain, they will be more inclined to invest in technologies that contribute to an innovative supply chain. Addressing the communication gaps and embedding this growth-oriented mindset across organizations is crucial for business to be more customer-centric and innovation-focused.
