Supply chain leaders entering most challenging era yet

Chief supply chain officers (CSCOs) are facing the most disruptive supply chain environment ever, according to a recent report from leadership advisory firm Egon Zehnder. The firm surveyed 235 large company CSCOs in 23 countries in Q4 2019, with a follow-up survey in March 2020.

The impact of Covid-19 was in the early stages of the flash survey (March), and CSCOs seemed fairly optimistic, with 72% saying they were at least moderately prepared for the impact of the virus on their supply chains. Only 60% said it would take more than three months to recover from the impact of the virus – which seems hopelessly optimistic today, and perhaps even a month ago. Covid-19 isn’t a flu virus that will just burn out in the summertime; it will continue to impact the economy and supply chains, even in ripple effect terms, until a vaccine is developed and administered, which could take 12-18 months or more.

The survey found that CSCOs are taking a key role in strategy, and have more experience than ever. Two-thirds said they had at least 20 years of experience in the industry, and had a strong relationship with the C-suite and were playing a key role in shaping strategy and customer experience. More than half reported directly to the CEO and managed teams of over 1,000 people.

Of course, talent shortage is a constant worry for supply chain leaders, as it seems to be for every functional executive. Nearly three-quarters said they were concerned about the current skill level of people in their company, and 79% said they were worried about their ability to recruit talent that can handle the increasing pace of change in the industry.

What are the top barriers to recruiting the right talent?

Respondents in Asia were most concerned about finding change-savvy supply chain talent (86%), compared to 78% in the Americas and 74% in Europe. Thirty-seven percent of respondents, meanwhile, said the biggest challenge was the lack of leadership competencies in potential candidates.

These concerns were high even before Covid-19 hit, with the answers sourced in Q4 2019. Closed borders obviously make it tougher to source foreign workers, while anti-immigration policy in the US and Britain makes recruiters’ jobs tougher – and pushes up wages further in talent-scarce areas. Supply chain leaders said they were paying more for talent (73%), while more than half said they were hiring supply chain experts from outside their organization’s industry.

The top three external challenges respondents said they faced in late 2019 were increasing cost pressures (21%), global economic uncertainty (17%), and rising demand variability (17%). The global economy looked to be trending downward even before Covid-19, so executives saw it as looming challenge previously. Now, with recessions assured in numerous regions, the severity and length of the downturns are what remains uncertain. Additionally, 62% of CSCOs said their supply chains lacked adequate resources to meet future challenges.

What are the top three external supply chain issues holding your organization back right now

In terms of internal challenges, nearly half of CSCOs identified growing supply chain complexity as the top challenge. Talent shortages and organizational culture came in second and third, respectively.

“While CSCOs have always been critical to a company’s success, recent world events underscore the need for strategic and adaptable supply chain leaders,” said Tom Reynolds, leader of Egon Zehnder’s global supply chain practice. “While the majority of data was gathered prior to the global pandemic, the findings draw interesting parallels to today’s challenges and bring them to the forefront. Now more than ever, CSCOs must be strong C-suite leaders, focusing on culture and building collaborative teams that expect the unexpected.”

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