Before 2020, if one were to dream up a string of events that could short-circuit your supply chain strategy, they’d be hard-pressed to conjure a more vicious combination than we’ve seen the past few years: geopolitical tensions, shuffling demand patterns, spiraling inflation, and intensifying weather accompanying a once-in-a-century pandemic.
The astonishing number of disruptions of the past three years has made this the most challenging and disruptive environment of my career. Inside many organizations, roles like mine were already evolving, but recent events have led to a metamorphosis in how companies view their supply chain strategy, and in turn how they view the role of Chief Supply Chain Officer. What was once thought of as a back-office function is now understood as a key enabler for customers and businesses.
Embracing supply chain as a fundamental pillar in Schneider’s overall corporate vision has enabled us to deliver more sustainability, agility and resilience with a stronger connection to our customers and suppliers. This has improved our business and helped land us second on Gartner’s Supply Chain Top 25 for 2022 list. The challenges of the past three years have hastened this supply chain strategy transformation and offered insights for leaders to leverage now and in the future.
Incorporate Supply Chain Strategy into Corporate Strategy
For years, supply chain leaders could rely on their experience to manage costs, lead times, and supplier relationships. In light of frequent and intensifying disruptions, that reality is changing.
The days of just-in-time and lean have ended. Decision-making through historical data on long time horizons doesn’t work in these new disruptive times. Now, agility, speed and digitalization rule the way we operate. It’s not enough to ensure inventories are accurately predicted. We need to react to events faster, altering sourcing methods and moving products to strategic locations with the precision and alacrity our customers demand.
When introducing a new product entering a new market, or establishing a pricing strategy, supply chain leaders need a seat at the table, and today CSCOs are pivotal voices shaping corporate strategy. This trend is not limited to Schneider Electric alone. In its Supply Chain Top 25 for 2022 report, Gartner notes that “CSCOs have been steadily handed more scope” and have “expanded their remit to take over leadership of previously adjacent spaces such as risk management and corporate quality”.
That’s why we’ve incorporated the supply chain function into our c-suite, reporting directly to the CEO, and collaborating with cross-functional groups like sales and product development to create a single, clear strategy to capitalize on our strengths and better anticipate emerging risks.
Think Digital First
Just as digitalization drives Schneider’s business strategy and value proposition, emerging technology also enables greater transparency, access to real-time information, and machine-assisted decision-making. It’s crucial that supply chain leaders of the future have a digital-first mindset.
This approach is enabled by adopting smart technologies like adaptive machine-learning, algorithms and big data analysis to create an autonomous supply planning program.
Our self-healing supply chain—winner of the Gartner Power of the Profession Award in 2022—uses machine learning and big data to balance stocks, order quantities and lead times. The world is changing fast, and we can’t rely on past data to predict the future. We need real-time data analytics to do advanced scenario planning, anticipating both large-scale disruptions and everyday risks across a large global network of suppliers, partners, and customers.
Focus on Sustainability
Sustainability drives everything we do as a company. Our mission is to be a sustainability practitioner and partner, collaborating within our ecosystem to drive a cleaner, greener future. A significant aspect of this mission is our focus on a transparent, sustainable supply chain. In today’s market, every supply chain leader needs to be thinking about sustainability and circularity the same way they think about quality or cost.
By capitalizing on our regional supply chain set up, we can significantly cut our carbon footprint by reducing transportation. Our customers are everywhere, and they expect customized product offerings, low prices, and speedy delivery. Mapping a complex network of localized suppliers brings competitiveness for our customers while also reducing our impact on the environment.
Our sustainable, regional approach is at the heart of STRIVE, our supply chain strategy. STRIVE’s ambitions include establishing 70 net-zero carbon plants and distribution centers by 2025, as well as further energy efficiency and carbon reduction initiatives across 300 manufacturing and warehouse facilities.
In addition, our digital, transparent supplier platform also helps us maintain circularity, safety, biodiversity, and quality from product design to launch to end-of-life.
But sustainability doesn’t stop with our own operations. As Gartner points out, CSCOs are evolving to be Chief Ecosystems Officers, “moving beyond simply representing their own company’s interests in the public sphere to forming coopetition-based ecosystems that drive outcomes that can only be delivered at broader scale”.
It’s imperative that we work with our supply network to drive carbon reduction throughout the entire supply chain. That’s why we launched the Zero Carbon Project, a partnership with our top 1,000 suppliers, to cut their carbon footprint in half by 2025, helping us drastically lower our Scope 3 CO2 emissions.
While the past three years have been unique in the level of disruption we’ve faced, even the worst crisis presents opportunities. My team, my colleagues and I have learned profound lessons from these experiences. Now is the time to keep this momentum and drive transformations for more sustainable, digital, agile, and resilient supply chains, from our suppliers’ suppliers to our customers’ customers.