Properly align and staff the supply chain organization

It can be difficult to organize the supply chain function in a way that will maximize its effectiveness and bring commensurate benefits to the company. Some companies are best served by embedding proficient supply chain management professionals in various business units. For others, a more centralized operation is most effective. Many of the progressive companies we have worked with, however, have adopted a hybrid approach that combines a centralized strategy to gain consensus with decentralized execution  to improve service.

Another emerging trend we have seen involves placing procurement, logistics, contract management, and forecasting/demand planning and similar management functions under the supply chain leader. This approach, depicted in Figure 1, is not appropriate for all companies, but it does give an idea of current thinking about supply chain management and the reporting structure

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Whatever structure you adopt, correctly staffing the supply chain organization is vital to success. Elevating staff members' supply chain management skills and knowledge is always a priority, of course. But top leadership focuses more on strategy and is less concerned about transaction ability. As supply chain leaders move up to join their companies' management teams, therefore, they must have additional characteristics. Best-in-class companies hire supply chain managers who have strong communication and relationship management skills (both internally and externally), the ability to think strategically, and a focus on value creation.