For Procurement Heads‘ latest Big Interview, he spoke with David Hazeldine about his supply chain career and whether supply chain have a seat at the top table in its own right.
What’s your definition of supply chain? And why is it pivotal in determining the profitability and success of a business?
Ian: I think it’s not necessarily a chain, it’s normally a network, and it’s normally a pretty complex network, where products potentially can pass through different paths.
I think the focus rather than being on supply or supply chain has got to be on value. This is about value creation through the chain – how do we add value as we go through activities, to support both the business agenda and also the customer. The purpose is ultimately about delivery to the end customer, patient or consumer.
So, how does it drive that customer agenda in a way that’s effective, efficient and profitable for the company?
I think that’s the key thing about the supply chain, it’s about the customer, making sure all those activities add up to deliver to the end customer, but also achieve the business objectives.
Is it pivotal for profitability success? I strongly believe it is.
You only need to look at the impact supply chain has on some of the key business metrics such as customer service – supply chain coordinates all the activities required to ensure successful delivery to the customer.
Typically, the owner of the service KPI has a huge impact on the bottom line.
In terms of cash flow, payments to suppliers, managing inventory – all the processes you place inventory through within the supply chain are part of that supply chain decision-making process – and typically supply chain owns that KPI in the business.
Then, when you talk about revenue and profit, supply chain has a big opportunity there too – especially through things like sales and operations planning – to ensure aligned commercial and operational agendas.
So I think about it as short, medium and long term impact. Short term – supply chains make decisions around prioritisation and allocation – so have a big impact on profitability. Medium-term – S&OP drives the agenda and provide sales and profit opportunities through capacity utilisation. Long term the supply chain strategy is there to try to deliver the end business objectives. Whether you look at the short, medium or long term, I think the impact from supply chain is pivotal to profitability and success.
Do you think procurement is part of the supply chain?
Ian: I’ve seen many different responses to that.
My personal view is I think it is or should be.
I’ve worked in supply chain roles where I’ve had procurement as part of my responsibility. I always feel that it works better when it’s included as part of the supply chain scope. It’s part of that flow going back through the tiers of supply, and also all the way through to the customer.
That is supply chain management – it’s the end-to-end management of the chain, and that includes the suppliers and making sure that the procurement strategies that you have are aligned fully with the end-to-end strategy.
In businesses where you’ve got a real disconnect between procurement and supply chain, those strategies aren’t integrated, and you often find quite siloed or reactive KPIs fighting against each other. I think those agendas need to be aligned very explicitly, and I think the best way to do that is to make them integral to the supply chain.
When you think about supply chain, it’s really easy for the untrained eye to think it’s just about the holding and movement of product.
It’s a common misconception, but as you said, it’s far broader than that.
Ian: When you talk about supply chain, people often talk about physical flows through the supply chain, which goes forward – or ‘logistics’.
Actually, the thing about supply chain that really makes the difference is the decision making.
And the decision making is about the information through the supply chains, it’s about visibility.
It’s about synchronisation and that’s a two-way flow through the whole supply chain, to facilitate something happening at the customer end of the supply chain.
If you haven’t got the front end of the supply chain in tune with that, then you’re not going to be able to achieve that synchronisation.
Why is supply chain resilience, agility and innovation so important today?
Ian: If you look at the events in the world over the last 12 months, it’s clear that we’re seeing unprecedented uncertainty in the world.
The pace of change through technology and generally the way the world is moving, it’s an accelerating pace of change.
Meanwhile, you’ve seen trends over many years – changing to the globalisation of supply chains, and they’re becoming more complex networks; customer trends and demands are increasing. So all of this, for me, creates real tension.
We want more secure and robust supply chains, we want more agile supply chains which can respond more quickly to customer demands, or as things change. Yet, we want lower cost, we want lower inventory, we want to increase service. A lot of these things are competing objectives.
And so is it really relevant for supply chain?
Absolutely, because I think it’s the role of supply chain to bring the ideas, new approaches, new ways of working to help the business; to articulate some of those choices, and how the business navigates through those choices; to be able to deliver supply chain strategy that delivers resiliency, delivers that performance, delivers the outcomes needed commercially, and to support the business strategy.
For me, that’s the supply chain’s role. Supply chain is in a unique position, with visibility across an organisation and connectivity across the organisation that I don’t think any other function has. And it’s empowered to be able to understand and offer a view on those – I don’t think any other function can do that.
David: What’s really interesting is that over those years, and the different organisations and sectors you’ve worked in, the supply chain has a very specific start middle and finish. Ultimately, however, when we talk about resilience, and when we talk about innovation, it’s easy, again, for the untrained ear or eye to dumb it down a bit.
What does resilience mean? Does that mean just your surety of supply? Or does resilience mean being able to adapt your product stream and your portfolio, changing client or customer demand?
It’s actually far broader and far more complex.
Ian: I totally agree.
But I guess with all those things you have to decide what is important for your business, you won’t be able to have them all and you need to make those choices.
You need to understand how those trade-offs are going to work in terms of the outcomes you’re going to achieve.
As you pull the different levers, the outcomes you’re going to get will differ. Nothing happens within these sorts of operations in isolation, all these things connect.
It’s really supply chain strategy that determines how all those levers need to be pulled in the right combinations to deliver what you’re looking to do as a business.
What impact has the pandemic had on the profile of supply chain, and what impact has it had on the relationship between the board or the business and the function?
A lot of businesses have lived and died because of the resilience of their supply chain.
Ian: Absolutely, and a lot of businesses are now looking at it in a different light, based on some of the impacts they’ve seen as a result of what’s happened during the pandemic, which is inevitable.
The simple answer is it’s got to be a stronger relationship to the board.
I find as a supply chain professional, it’s a really interesting time to live through right now. I genuinely think that the pandemic is going to prove to be a watershed moment for the profession.
Never before has the visibility of what supply chain is doing been so great.
People are using the term supply chain more often than I’ve ever heard before.
It has become very visible.
As a result of that people are looking at it and thinking about what do they need to do – have we got it right?
I’m sure a lot of companies are now going to review those strategies, based on their experiences, and perhaps some of the problems that they have faced.
Companies are talking about, for instance, moving from some of the global extended supply chains that maybe haven’t got that level of resilience – focused on getting the best price from a single source – to multi-sourcing and thinking very differently about risk management.
As part of that activity, we’ve seen quite a rationalisation of portfolios to try to simplify and increase capacity.
I think it will have a big implication in terms of how we manage portfolio analysis, and all of these effects are potentially going to impact operational and commercial strategies moving forward.
Based on what we’ve been talking about, I think that supply chain inevitably is going to be at the heart of those conversations.
What I would say though, is that for the more forward-thinking businesses, those relationships will be strong anyway.
They shouldn’t need a pandemic to encourage that.
For many industries, supply chain owns the majority of the cost for the business, and many of the key metrics in terms of inventory or service.
It should be at the heart of the business strategy, and the supply chain strategy is developed to support that.
Sadly, it hasn’t always been the case for a lot of companies, but I think this will be the tipping point to move towards that.
David: I agree.
Should supply chain in its own right be at the table?
Ian: I’ve always been an advocate for that.
I’ve worked in many corporations and typically supply chain doesn’t have a board seat, although I know that’s changing.
It typically reports into an operational role or sometimes commercial, but very rarely independently, and I do believe that it is an independent function.
It’s trying to balance different objectives, including both commercial and operational.
Supply chain has a much bigger remit than most traditional operational head roles, and I think as a result of that, you need somebody that can think much more end-to-end. I don’t see that being your traditional operational head, and I very much believe that most companies will have an independent supply chain head at the board level in the next decade.
David: I’d love to see that. I have been championing Chief Commercial Officers coming from procurement and supply chain because, for me, that’s the natural route.
Ian: It’s at the heart of the business, so it needs to be viewed like that.
I think some organisations are starting to think that way, and you’ve started to see the prominence of a Chief Supply Chain Officer at the senior levels.
But, most companies are still thinking in a much more traditional sense and I think they’ll have to change their thinking either through events like we’ve seen over the last year, or through the fact that they start getting left behind because their competitors are starting to think differently about their supply chains, and starting to gain competitive advantage as a result.
David: I agree, and again, it’s a nice link to the next question, which is around the supply chain being intrinsically linked to sustainability, equality, diversity, inclusion agendas.
I’m championing the sustainability pillar within Procurement Heads and I’ve done a lot of work talking to CEOs across different businesses in different locations and for me, sustainability is absolutely vital.
It’s a vital legacy piece, which supply chain is, in my opinion, pivotal to that journey.
I’m just interested in how you think it is intrinsically linked, or whether it’s nice to meet certain requirements across that spectrum?
Ian: I guess it depends on the approach, and whether you’re really genuine around whether you’re going to deliver those kinds of goals or not.
I think on the sustainability front, supply chains are at the very heart of that debate.
If you think about the use of resources, the efficiency of factories, transport or the carbon footprint, those have impacts on things like lead times and inventory strategies. All these things are linked, and they’re at the heart of the business.
I think if you’re going to set out a sustainability agenda, then it’s got to be linked to the supply chain agenda because the two are part and parcel of each other, and, I guess, brings the procurement link in the partnerships there as well, in terms of sustainable sourcing, packaging strategies, and innovation.
The whole sustainability agenda is really being driven through the supply chain in one way or another and I think over time, there’s going to be further pressure from consumers in general through what we’re doing to the planet, which is going to challenge supply chain to come up with some answers for that.
I see a lot of companies coming out with statements that they’re going to deliver X by 2030, which is all very good, but the reality is that it’s going to be the supply chains at the sharp edge of the delivery of that.
From an ED&I viewpoint, I’ve seen a lot of commentary around a lack of women in senior supply chain positions, but it’s also about diversity in general.
The way the pandemic has changed people’s perceptions of access to a site, by way of being able to work remotely, clearly breaks down potential hurdles.
It’s a journey that all functions are on, not just supply chain.
There’s plenty of evidence out there that talks about diverse teams performing better.
I think in the supply chain huge strides have been made. When I think back to the start of my career to where we are now, it does look different, but clearly, there’s a lot more that we need to do.
There’s a lot we still need to do around gender. I’ve seen the balance starting to change and I think in some parts of the supply chain, I think procurement particularly, and in the supply chain management areas, that’s probably moved quite a long way. Perhaps a lot less so in physical logistics, but it’s still moved.
But, I think we’ve still got a long way to go.
But it’s about trying to get the right variety and the right diversity of inputs into the business process.
For me, I think this is particularly relevant for supply chain because it is so varied, it’s so multidisciplinary. I think supply chain has got a real responsibility to drive that agenda because it’s going to benefit from bringing people in with different backgrounds, different experiences, different disciplines, different thinking.
I think we’ve got to be more multi-dimensional than thinking about it just in the sense of ticking boxes.
David: I think that’s absolutely spot on. When I’ve explored this subject with different people, what I think is also really important is to actually understand it’s far broader than just the headline elements that are always bandied about. When you talk about sustainability, often the first thing people talk about is carbon neutral – it’s far more than that. When you talk about ED&I, the first two things that generally come up are race and gender – but it is far broader than just two elements.
Ian: Globalisation brings massive diversity naturally. If you can’t navigate that appropriately then you’ve got a problem. Again, supply chain is at the heart of the diversity agenda, because of the nature of what we do and how diverse it is, both from a functional standpoint and a geographic point of view too.
David: It also becomes a competitive advantage when hiring. Candidates are asking companies what they are doing about sustainability and social benefit. People coming into a business want to understand the actual genuine drivers for change.
Ian: Yes, and they want to understand the core values of the business, and do they align to their values? Clearly, diversity and sustainability agendas are important to people, and so it has to be important to businesses as well.
Companies that don’t make sustainability and diversity agendas important won’t attract the best candidates, and they won’t achieve the best performance as a result.
It’s a virtuous or vicious circle, depending on how you approach it.
You’ve thrived in supply chain for 30 years, but why did you get into it?
Ian: I think I stumbled into it a little bit by accident.
When I started my career in the early to mid-90s, most companies didn’t really have a supply chain function as such.
I actually started by joining an ERP planning implementation in a company. When you’re looking from the planning side of supply chain, the sort of the visibility you get across the business, the understanding that you get of a business – that viewpoint is second to none. And for somebody coming in early into their career, the amount that I learned about how a business operates across all those functions was phenomenal.
It got me wanting to explore that much further. Even now, I still believe, a planning background is probably the best grounding that you can get because you’re at the heart of everything, and planning is the drumbeat of the whole supply chain.
That’s what drew me in initially. Since then I’ve gone into different companies, different industries, and explored different parts of the supply chain.
I got involved in other things like physical logistics, customer services, procurement, sales, operations, planning, and built my way up to, obviously an end-to-end supply chain role. Over the last 15 to 20 years, I’ve held broader, more senior roles, and I really like my job.
I don’t think anywhere else in the business could have given me that much variety.
You connect with pretty much every single function in the business in some way or other. But you connect outside as well, both your supply end and the customer end.
In some of those roles I’ve had, I’ve spent maybe 10-20% of my time with customers, 10-20% of my time with suppliers as well as across the business. You’re the hub of all the connections and information flows that go through the business, but also beyond the business, and I think that’s such a privileged position to be in.
David: Absolutely, and you talk always with authenticity and genuine passion about what you do, and I think that shows yes, it’s work, but it’s a vocation too.
Ian: You’ve got to believe in the role, you’ve got to get on the front foot proactively and try to grasp the opportunities to make that impact.
If you’re very passive, you’ll find stronger voices in the business that are going to take the agenda a different way. I passionately believe in thinking about the end-to-end supply chain.
Only supply chain professionals are going to be able to educate your operational, commercial or financial colleagues about the power of thinking about supply chain in an end-to-end fashion and aligning the organisation to that.
No one else is going to do it if you don’t do it.
We’ve talked about supply chain resilience, agility, and innovation – in your day-to-day role, you’ve got to show all of those qualities because all those are core competencies.
I don’t think many other functional roles within a general organisational structure deals with such a variety of potential and actual challenges – you have to be able to pivot almost instantaneously from production planning to logistics or looking at the inbound supply of raw materials.
There’s such diversity.
I find the people who thrive in supply chain are the ones who want to be stimulated, they don’t want the same routine day in day out.
David: All these things have knock-on effects, good or bad through the supply chain, supply chain’s job is to try and connect all those things in the right way. No other function has got that visibility. The whole point of supply chain is that it gets above the siloes and connects across the whole organisation and no other function really can do that. For me, that’s where the big opportunity lies for supply chain because I think organisations are only just starting to understand how to unlock that potential.
Ian: Absolutely, and also its value.
David: I think value is going to be the word for this decade actually. I think that makes it really interesting.
Ian: I think the last year will prove a watershed moment in the history of the profession.
Supply chain management as a concept has been around since the early 80s, and logistics has been around since the start of time, but it hasn’t previously been looked at as a science.
Organisations are starting to switch on to the fact that supply chain management can unlock value in a way that historically we’ve not seen.
I think that over the next 10-20 years supply chain will become a much more prominent function, driving organisations’ agendas.
It would be nice to be starting a career now, rather than trying to be a trailblazer, but trying to influence the organisations I’ve worked with has been an exciting journey.