Supply chain management comprises a complex set of functions within an organization, affecting the full spectrum of what that business does, from product or service creation and development through production, marketing, distribution and sales. With globalization and increasing numbers of multinational corporations, supply chain logistics management has only gotten more complicated, spanning different economies, cultural norms, markets, labor laws, and tax and import/export regulations. But it is not simply a combination of logistics tasks and systems. Managing a business’s supply chain network involves bringing together a vast array of personnel, departments and partner companies to maximize efficiency, service and profits.
The COVID-19 pandemic made the complexity — and fragility — of supply chains abundantly clear for industry professionals, politicians and the everyday consumer. Supply chains ground to a halt due to various factors like cracks in siloed sourcing and production networks, disruptions in global partner regions, the explosion of e-commerce, challenging conditions for maintaining personnel continuity safely and a tight labor market as the pandemic winded down. Recovering from these logistical disruptions and rebuilding the workforce while keeping workers safe and engaged proved immensely difficult.
Managing people and relationships is integral to supply chain management, and effective leadership is essential to success. Supply chain leaders continually analyze market trends, utilize appropriate information systems and big data sources, make decisions based on these analyses and promote innovation to support company growth. Accordingly, business leadership skill and knowledge development is an important area of study for candidates enrolled in degree programs like the online Master of Business Administration (MBA) with an emphasis in Supply Chain Logistics Management program at the University of West Florida (UWF).
How Does Supply Chain Management Relate to Small- and Large-Scale Company Leadership?
The importance of effective supply chain management to a business’s success is clear, from small local upstarts to multinational corporations. A company’s supply chain management leader may simply be the small business owner, conducting all operational logistics themselves or delegating them to a small staff or other contracted logistics companies.
In a larger corporation, entire departments specialize in logistics systems development and execution, transportation, information systems analysis, research and design, market analysis and strategy, distribution, international legal systems and considerations, etc. Oversight of all these departments may be the responsibility of a specialist supply chain manager, another high-level managerial role or a C-suite executive (chief supply chain officer, chief executive officer or chief operations officer).
ESG and Supply Chain Management
Modern-day businesses — small and large — place increasing emphasis on what’s currently known as environmental, social and governance (ESG) matters. ESG evolved out of corporate social responsibility, providing a framework for measuring a company’s performance in terms of environmental and societal impact. According to the Corporate Finance Institute, the ESG framework “helps stakeholders understand how an organization is managing risks and opportunities related to” ESG criteria or factors.
Today’s consumers, politicians and, importantly, investors focus on how businesses handle environmental and social challenges. For example, how does a company support diversity, equity and positive societal change? In what ways does a business offset its environmental impact, promote environmental justice and work to mitigate the effects of climate change?
A business’ ESG performance is closely tied to its supply chain management processes, from responsible materials and labor sourcing to environmentally sound logistics and distribution channels. Accordingly, many businesses now include ESG-focused personnel in the C-Suite, chief sustainability officers being an example. These executives often work closely with or oversee the supply chain management team in high-level leadership roles.
What Does Good Leadership in Supply Chain Management Look Like?
Regardless of a company’s size and management structure, the essence of supply chain management consists of seeing the company’s product or service through from start to finish, encapsulating all the various departments and stages of production and delivery. Facilitating a fluid collaboration between all aspects of a supply chain network is essential to achieving company goals at the most basic bottom-line level and in competitive advantage-seeking and company growth.
In this sense, many of the strongest supply chain leaders have actual experience with each aspect of their supply chain, giving them an in-depth understanding of every stage of the supply chain cycle.
The supply chain leader cannot possibly accomplish each task necessary to orchestrate the supply chain management process. Instead, the supply chain leader facilitates logistics orchestration by delegating and hiring people with the right skills for the right jobs, training them on how to work best within their company’s structure and network and monitoring and upholding performance standards.
The Importance of the Innovative Spirit in Supply Chain Leadership
The best supply chain leaders make intelligent use of industry metrics, market data and other information systems tools to evaluate and improve company performance — in monetary and ESG measures — through strategic decision-making and innovation.
Innovation is one of the most critical aspects of successful supply chain management. Good leaders stay aware of market trends and logistics technologies and systems, constantly looking for ways to meet existing demand and spur new demand, creating opportunities for company growth. The most successful leaders also promote, encourage and incentivize innovation and initiative in their employees and partners throughout the supply chain.
Ideally, this creates an environment where innovation and cross-department collaboration benefit everyone involved, increasing profitability, fostering supply chain agility, improving social impact, promoting diversity of thought and lowering the organization’s carbon footprint. These factors are the primary metrics by which leading supply chains are judged, evidenced by Gartner’s 2022 Global Supply Chain Top 25 rankings.
Clearly, supply chain management aims to successfully tie together many aspects of company function, logistics, human resources, information systems, market analysis, and research and development to create an effective supply chain. Strong leadership is essential to managing organizational behavior, collaboration, motivation and the drive to innovate, which puts companies ahead of the competition. Degree candidates enrolled in UWF’s online MBA with an emphasis in Supply Chain Logistics Management program will benefit from the opportunity to study this vital role of organizational leadership in supply chain management.