Numbers tell stories. 

When nearly three million vehicles were cut from production in 2022 and global projections suggested a bleak outlook, we knew that we had hit another supply chain wall.

This time, the catalyst was a global microchip shortage. In response, Nissan made fewer vehicles, General Motors interrupted its pickup truck production, Apple Inc. warned of delays in its iPhone and tablet supply, and Intel predicted it might be a year or two before supply could meet demand.

As the only U.S.–based leading-edge chipmaker, Intel moved to create a more resilient supply chain by investing more than $20 billion to build two new chip factories in Arizona and Ohio and hiring almost 7,000 people. Meanwhile, China continues to make headlines by pumping billions into building massive chip factories, driving vigorous competition with the U.S. that could further disrupt the global supply chain.

Over the last few years, supply chains have become a prominent topic of discussion, from presidential briefing rooms to family dining rooms. From semiconductors to sriracha sauce, there are supply chain inconsistencies in every industry, country and household. To right these unprecedented global imbalances, companies must incorporate supply chains into their strategies not only as an opportunity to cut costs, but also as a competitive differentiator, by enabling new business models, driving predictive processes and minimizing risks. Having a supply chain expert at the C-suite table has become essential for providing a long-term strategic view that mitigates disruptions across the board. 

The Changing Role of the Supply Chain Leader 

Enterprises are realizing that they can better predict and respond to unexpected events if they invest in networks and relationships that balance the cost savings of global suppliers with the need to reduce risk through reliance on local sourcing. 

Companies need to embrace digitization in order to better manage, run and maintain facilities, factories and overall assets vital to core business functions. A chief supply chain officer (CSCO) is key to managing cross-departmental and cross-company processes. They must have domain experience in anticipating, mitigating and managing disruptions, and are the ones who make strategic decisions with both short-term and long-term goals in mind.

The topic of sustainability, for example, is top of mind for customers, investors and employees across industries. But many companies are unsure how to track, monitor and measure key performance indicators across these complex systems without a supply chain expert to guide them. End-to-end supply chain transparency is critical, both within the walls of a business and across the business network of suppliers, contract manufacturers and logistics service providers.

To provide a real-world example, one of our customers is focusing on how to better understand sustainability in the hardware it builds by reusing existing business data and combining it with environmental factors to calculate the carbon footprint, periodically and at scale. Sustainability has become incorporated into these discussions from a planning and production standpoint, but the company is now realizing it needs to consider the full lifetime of the product. To understand and account for these disparate concerns, businesses need someone with a keen understanding of supply chain issues at the very top of the strategic decision-making process.

What Customers Are Saying

As the supply chain has come into sharper focus around the globe, businesses are taking the challenges that come with it more seriously. There’s been a lot of investment in digital supply chain capabilities, with an early emphasis on planning and resilience. The goal is to create a plan that considers the entire product lifecycle, from design to operation, with full visibility and accountability. This gives companies the ability to see long- and short-term perspectives, and the opportunity to showcase how their teams are working together to achieve a common goal.

Other companies are moving from a demand-centric to a supply-centric model. In the case of Intel, being able to manufacture based on the availability of materials in various geographies is crucial. Another example is the automotive industry, where the chip shortage is creating friction in the supply chain as industries compete for materials from the same suppliers.

The solution lies in visibility-driven efficiency. Improving operational visibility allows companies to rapidly speed up decision-making windows and better plan inventory management. Wegmann Automotive is one company that has recently made the switch to enterprise resource planning (ERP) software and cloud-based analytics. In doing so, the company has been able to improve on-time delivery and streamline scheduling.

Overall, companies are building and expanding their supply chain teams in differing ways that point to the same goal. If corporations can work to prioritize hiring or promote C-suite employees with supply chain experience, they’ll be able to increase productivity and sharpen the focus on business priorities. In today’s environment, businesses must be resilient and determined to elevate their supply chain partners. It’s no longer about playing defense; it’s about shaping a strategy for supply chain resilience that focuses on disruption avoidance, but also on redesigning a more proactive and mitigative performance.

Jan Gilg is president and chief product officer of SAP S/4HANA.