Excerpted from From Source to Sold, with permission from the authors
Usually, the only kind of attention supply chain gets is negative. If an order isn’t manufactured, shipped, or delivered on time, supply chain is where the fingers start pointing. But in 2020, as COVID-19 took hold around the world, the often-invisible work of supply chain became a matter of both intense public interest and boardroom gratitude.
When resource scarcity, workforce shortages, and transportation bottlenecks hit hard, it was supply chain experts who kept supermarket shelves stocked with food and stopped businesses’ bottom lines from plummeting. And as more and more disruptions followed on the heels of the pandemic—the semiconductor shortage, the reduction in rubber and lumber production, the Russian invasion of Ukraine—it became apparent that it was supply chain that kept the world moving in times of chaos.
So, if supply chain leaders have proven time and again that they can successfully steer the ship through a crisis, why aren’t more of them captaining the ship permanently—from the CEO’s desk?
From Source to Sold, the new book from McKinsey partner Knut Alicke and Radu Palamariu, Managing Director of Alcott Global, examines just this question, interviewing aspiring and current CEOs who are also supply chain leaders. Through a series of interviews, short excerpts from a few of which appear below, they have identified some of the common approaches and mindsets required to build successful supply chain operations, and the opportunity the role provides to grow into a more senior position.
Beatrix Praeceptor is the chief procurement officer of the UK-listed paper and packaging company Mondi Group, based in Vienna, and has been designated the CEO of Greiner Packaging Division, Greiner AG, effective May 2023. In her interview. she points out that: “A high-performing supply chain is not so much about processes and tools as about people collaborating and communicating effectively.” She also comments that: “While in procurement, I found the magnitude of the end-to-end supply chain fascinating. I understood that being a supply chain manager gave you control over the entire value chain, irrespective of what you produced.”
Sascha Menges, CEO of German industrial tool and hardware manufacturer Festool/TTS Tooltechnic, has a similar perspective on the broad oversight of supply chain leaders: “One of the joys I had in managing supply chain operations is working on various projects and interacting with all sorts of stakeholders. SCM is the lifeline of several companies, and there’s no success in the business if the supply chains don’t work—as is clear from the disruptions caused by the pandemic, destabilizing operations around the world.”
While there are many routes to climbing the ladder in general management, Menges argues that supply chain leaders have an edge as they intuitively understand how the underlying business works. “If you’re in the supply chain, you understand many functions, you’ve worked with all of them, which eventually equips you to be responsible for all of them if you are elected to the top,” he says. Furthermore, by being on the ground and witnessing the constant changes in day-to-day operations, SCM becomes something of a crystal ball that allows a glimpse of what the company will be facing in the future—an invaluable asset for anyone looking to move into the C-suite.
So, what of the mindset required to be an effective leader of supply chains and beyond? Jim Rowan, CEO of Volvo, talks about the importance of leaders embracing lifelong learning and listening: “Ultimately, the supply chain is a people’s business, no matter what you’re building. It’s about getting the best from individuals and building strong, cross-functional teams. This comes with experience—I don’t think you can learn how to truly engage with people [by reading] a book. You have to lend an ear to individuals, to their perspectives, and [then] you realize there’s always something to learn.”
This focus on the importance of people and collaboration is also shared by Beatrix Praeceptor: “I could see that a high-performing supply chain is not so much about processes and tools as about people collaborating and communicating effectively. [So] I gathered people with the right skill sets, a collaborative mindset, and holistic thinking around the table to ensure [we] have the system up and running [as it should].”
Essa Al-Saleh, CEO and board member of Swedish electric-vehicle manufacturer Volta Trucks, also focuses on the importance of the right mindset in leadership: “It comes down to being continually dissatisfied—not in an angry, irrational way, but in a positive spirit,” he explains. “It helps if you have an agile mindset where you are willing to start something, take risks, and iterate in short cycles. As a leader, cultivating a mindset where you’re never satisfied [means] you avoid becoming lethargic, which is a sure way to lead you downhill.”
Sasha Menges talks about the need for great leaders to become disposable and replaceable, thanks to the strength of the teams they build up around themselves: “The best leader would make himself or herself unnecessary and fully replaceable,” Menges says. “This means that your subordinate can actually do everything that’s needed operationally, and from a decision perspective you aren’t needed. As a leader, if you could reach that state across your team—where you have people who can do the job better than you do—it means you have achieved great success.”
In the last interview mentioned in this piece, Tan Chong Meng, group CEO of PSA International, a leading global port group and cargo solutions provider, shares more thoughts about the mindsets needed for successful leadership: “You will get a lot more mileage in your career if you are propelled by your purpose—don’t choose your next step because of a promotion, let the promotion come to you.”
He additionally points to a multidimensional approach to being a supply chain leader: “Head, heart, and guts—these are the three qualities a strong leader must have,” Tan says. On that first point: “It is important to be levelheaded, capable of connecting with everyone on the team. They should have the ability to share their vision and explain it so that others can understand.” Next, heart: “They should be able to engage with people authentically. They must inspire followership, trust, and spontaneous stretch instead of using commands to get the most out of others.” And finally, guts: “The ability to make decisions and stand by them is a critical trait, especially amid the unknowns. A leader must be bold and capable of executing and handling strategic, people-oriented, and transformation issues.”
As we move through the beginning of 2023, with little sign of supply chain disruptions easing and an increasing need for supply chain transparency, the visibility and responsibility of this role are likely to grow. Indeed, the view of supply chain leaders from the ground could be said to give them the clearest and furthest-reaching vision of all. The processes that they work every day to perfect are the key to an organization’s stability and sustainability. And the resilience they look to build into the system is the biggest kind of thinking there is, because it will safeguard your business against an ever more disruptive future.