Selling your CEO on logistics

Joel Sutherland has had a remarkable career in logistics and supply chain management, a career that was recognized by the Council of Supply Chain Management Professionals (CSCMP) when it presented him with its highest award this fall.

While accepting the Distinguished Service Award, Sutherland remarked that as he left his hotel that morning, he mentioned to the doorman that he was off to a supply chain conference. The doorman wondered just what that was all about. I'm sure we have all had similar experiences: Logistics and supply chain management, Sutherland noted, has a long way to go to get the recognition and respect it deserves. It is a profession that touches everyone and has made vast improvements in the way products move around the world, but it's largely invisible to the general public.

Not only is it invisible to the public, but the profession—and its role in corporate success—often goes unacknowledged in the executive suite. In a recent issue of consultant ARC's online publication Logistics Viewpoints, Adrian Gonzalez observed that CEOs have historically viewed logistics as more of a cost center than a competitive differentiator. That's why many are willing to outsource logistics operations to 3PLs. He added that the true test of whether a CEO values logistics is his willingness to invest in it.

Gonzalez argues that there's more to persuading senior management of the value of logistics than simply translating that value into financial terms. "Most of them are supply chain and logistics illiterates," he writes. The only way to get the CEO to understand supply chains, he suggests, is to get his hands dirty—picking orders in a DC, working on a dock, riding along in a truck—to see first hand what's involved. At the very least, Gonzalez says, you ought to drag execs along to some of the major industry conferences.

It's a great idea, although I'm not sure how practicable it is. The CEO who should go is the one who doesn't understand that he needs to go. The one who does understand probably doesn't need to go.

Some businesses do get it. Cliff Lynch, executive vice president of CTSI and author of a well-read column in this magazine, argues that for the last couple of decades, Wal-Mart has been one of the most important forces driving the evolution of logistics and supply chain management. (Indeed, the keynote speaker following Sutherland at the CSCMP conference was Gary Maxwell, senior vice president of international supply chain for Wal-Mart.) By investing in its logistics operations, Wal-Mart has developed a hyper-efficient supply chain that has proved time and again to be a powerful competitive advantage. Maybe the way to get your CEO to understand the value of logistics is to remind him of that.