Supply Chain Overtakes CIO in Spending March 5, 2008
Posted by David Fontaine in News.Tags: CIO, Logistics Management; AMR Research, supply chain management
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Kevin O’Marah, Chief Strategy Officer for AMR Research, published a great edition of his “Chain Reaction” e-newsletter in mid-February that made a ton of sense. Not only that, it had a couple of stats that really drive home the significance of supply chain operations for most companies.
In his column, titled “All Hail Supply Chain,” Kevin notes the changing role of CIOs in many companies – particularly since the heyday of the CIO in 2000. Today they are under constant scrutiny to justify costs and projects. And in many industries the role of CIO has moved from reporting to the CEO to reporting to line of business executives or other executive team members, possibly the CFO or COO.
We’ve seen supply chain management grow over the years from basic, regional or nationwide logistics and transportation management to almost a military-like (in some cases) orchestration of global transportation, systems integration with external business partners, various degrees of compliance requirements and on and on and on.
I recall talking to a friend who works at a major 3PL company over the past year. He commented that a lot of the senior execs at his company got into the 3PL business in the 60’s and 70’s because they thought it would provide a solid living for their families, not because they thought they would be multi-millionaires!
But even with the emergence of supply chain management as a competitive differentiator and people making great money in the sector, Kevin’s point is that there are still not enough supply chain executives at the table in corporations today. Why should they be? Here’s the stat!
AMR estimates that most companies spend between 2-5% of revenue for IT each year. If you total all the expenditures on supply chain management, including direct materials sourcing, manufacturing operations, packaging, handling, and transport, that accounts for about 50% of revenue. Think someone should be directly accountable for how those expenditures affect the companies bottom line? I do.
If you are in supply chain operations, have you seen your role change to become more strategic over the past few years? If so, I’d like to hear your stories. Your examples might give other readers on the blog inspiration for new professional development goals or even practical ideas for how to take that next step in their careers.
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