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Guest Post By Emmet (John) Fritch, Ph.D
Associate Professor, School of Business, American Public University
The shipping company DHL reports that 58 percent of supply chain and operations companies have trouble finding the right combination of leadership and analytical skills in employee candidates. These companies experienced particular difficulties locating qualified candidates for supply chain management positions.
According to university professors Stanley Fawcett, Gregory Magnan and Matthew McCarter, “People are the key bridge to successful collaborative innovation and should therefore not be overlooked as companies invest in supply chain enablers such as technology, information, and measurement systems.”
However, adversarial relationships are common among companies in supply chains. In 1998, professor Edward Morash documented a progression from silo organizations, moving from independent organizations such as production, logistics, and marketing to integrated organizations combining each organization into an intra-organizational process. Morash also noted the presence of inter-organizational collaborative structures connecting multiple company organizations into one integrated supply chain.
Supply Chain Performances Suffer When Traditional Management Techniques Are Employed
Many companies rely on conventional management styles using techniques such as planning, organizing, implementing, and control. In intra-organizational structures, such as supply chains consisting of several companies, traditional methods do not achieve the same degree of cooperation and performance as organizations with transformational leaders. As a result, supply chain performance suffers.
Supply chain managers control internal company relationships through a position of power. Managers with this power have direct authority over employees.
In multiple-company supply chains, this power is not as effective. Managers do not have control over those employees who are not reporting in the same company chain of command. A different dynamic is in play with outside supplier organizations.
Where managers do not possess a position of power, leaders must be capable of motivating employees across multiple company organizations. Transformational leaders should achieve results through personal motivation instead.
Literature over the past decades supports the idea that CEOs of companies with a dependency on strong supply chain management benefit when the leadership style of senior supply chain management contributes to company success. However, understanding the type of leadership style associated with supply chain performance has not been widely reported. Additionally, there are few empirical studies on the effectiveness of supply chains based on leaders’ styles.
The Importance of Transformational Leadership in Supply Chain Management
According to Bruce J. Avolio and Bernard Bass, transformational leadership is a leadership style in which followers form an emotional attachment to leaders and are motivated to perform as a consequence of the way leaders behave. Transformational leadership has long been recognized as an effective way to lead organizations.
In 1985, Bass defined three types of leadership styles: transformational, transactional, and laissez-faire. Each style has its own characteristics and sub-categories. The five elements of transformational leadership are described in the following table.
Summary of Transformational Leadership Styles
|
Leader Trait |
Characteristics |
Description |
|
Individual Consideration |
Leaders who understand the personal and professional needs of employees. |
Leaders in this category typically go out of their way to support both personal and professional needs of employees. They strive to change cultures and improve performance. |
|
Idealized Influence (Attributed) |
Leaders who stress to employees the need to achieve goals. |
Leaders in this category typically stress a sense of organizational mission and encourage the use of power to accomplish department objectives. |
|
Idealized Influence (Behavior) |
Leaders who encourage pride of the department and stress the importance of demonstrating strong commitment. |
Leaders in this category use role modeling to demonstrate expectations. Microsoft’s CEO Satya Nadella is an example. |
|
Inspirational Motivation |
Leaders with inspirational motivation traits provide employees with a set of shared goals and the vision necessary to attain them. |
|
|
Intellectual Stimulation |
Leaders with intellectual stimulation traits motivate employees to rethink prior situations and problems in new ways. |
Employees are encouraged to examine they how they feel about prior assumptions and are encouraged to work with leaders in identifying new ways to address problems. Intellectual stimulation is in contrast to traditional management styles that rely on Fredrick Taylor’s scientific method of job definition by industrial engineers. |
Source: Langston University study on transformational leadership
Survey Assessed How Supply Chain Performance Improves with Leaders Using an Individual Consideration Leadership Style
A survey of supply chain professionals that I conducted revealed supply chain performance improves when the leaders conduct their leadership with individual consideration. For this study, professors Kenneth J. Peterson, Gary Ragatz, and Robert Monczka established the supply chain performance variables. These included:
- Product costs – measured by comparing actual prices paid over time
- Delivery – measured by the degree on-time shipments improved or did not improve over time
- Quality – the degree suppliers did or did not improve on meeting specifications
How the Research Survey Was Administered
Eight hundred participants were selected from the Council of Supply Chain Management Professionals (CSCMP) membership. Eighty-two fully completed surveys were returned and assessed by a systematic sampling technique.
The study involved two different questionnaires. One questionnaire provided participants’ perceptions of supply chain management leaders’ styles. The second questionnaire assessed supply chain members’ perception of their company’s performance.
Company performance was based on participants’ perception of their company performance for product cost, delivery, and quality. A correlation and regression test was applied to establish relationship values and statistical significance.
Results of the Survey
The results indicated relationships between each of the five transformational leadership sub-categories. The survey found that leaders exhibiting individual consideration could be expected to achieve 17% better supply chain management results than leaders not exhibiting individual consideration.
Overall, according to the perceptions of supply chain professionals, CEOs who appoint top-level supply chain leaders scoring high on individual consideration will see increased supply chain performance.
About the Author
Dr. Emmet Fritch is a full-time associate professor in the School of Business at American Public University. He holds an M.S. in technology management from Pepperdine University and a Ph.D. in business administration from Northcentral University.