Why Future CEOs May Increasingly Come From An Unlikely Source: Supply Chain

As operational excellence surpasses new technology to become an increasingly significant differentiator in establishing competitive advantage. JL

Nader Mikhail reports in Fortune:

We live in a world in which customers are no longer impressed by two-day delivery. This “Amazon effect” has reset the bar for operational execution. Business leaders must now perfect how they get products to the right place at the right time or risk losing their customers to faster competitors. (But) product companies only control 20% of their supply chain; they work through external suppliers, carriers, and contract manufacturers. Supply chain isn’t about potential; it’s (about) execution, consistent performance, and juggling complex, constantly changing details; the secret weapon to maintaining a competitive edge.
We live in a world in which customers are no longer impressed by two-day delivery. In fact, it’s now the longest customers are willing to wait. This “Amazon effect” has reset the bar for operational execution, and business leaders must now perfect how they get products to the right place at the right time or risk losing their customers to faster competitors. Because of this dynamic, CEOs of the future will disproportionately come from a traditionally under-appreciated business function: the supply chain.
The Amazon effect has redefined customer expectations and business behaviors, changing the nature of what corporations need from up-and-coming CEOs. Board members are increasingly turning to leaders who have made careers out of translating the big picture and thousands of moving parts into executional reality. The ranks of future CEOs will be filled with former chief supply chain officers (CSCOs), not only former chief revenue officers or chief financial officers. Corporate value is increasingly driven by the volume of satisfied and repeat customers. That’s reflected not by effective management of millions in P&L, but by effective management of billions in cost of goods sold—COGS—as well as the critical brand impact of corporate social responsibility programs. All are impacted by a tightly managed supply chain.
As founder and CEO of a supply chain software company, I’ve had the privilege to work alongside many such executives. Think of the operational mastery necessary for McDonald’s CSCO Francesca DeBiase to work with thousands of suppliers to produce billions of renewable cups, straws, and wrappers a year. Consider Starbucks’ chief procurement officer Kelly Bengston, who is responsible for the strategic sourcing processes of more than 500 million pounds of ethically-sourced coffee beans from all over the world to serve 12 million customers each day at 24,000 stores worldwide. Or look to Johnson & Johnson’s CSCO Kathy Wengel, who manages more than $25 billion in COGS to bring more than 350,000 healthcare products to consumers and patients around the world. In a world where companies are made or broken by how quickly and consistently they serve their customers, supply chain leaders are becoming the world’s most powerful executives.

In order to understand the challenges that operations executives like these overcome on a daily basis, it’s crucial to understand the nature of most global operations: organizationally cumbersome, siloed, and not designed for rapid execution. Product companies typically only control about 20% of their supply chain; they mostly work through external suppliers, carriers, and contract manufacturers. And despite working with broken systems and immense organizational friction, they are never recognized for the daily heroics of their teams, who are constantly fighting fires to meet growing customer expectations. Supply chain professionals work around the clock and across thousands of partners to overcome unexpected product shortages, catastrophic natural disasters, and unreliable distribution networks. Supply chain isn’t about potential; it’s where the rubber hits the road—relentless execution, consistent performance, and an ability to juggle thousands of complex and constantly changing details to deliver customer delight.
As the operational dynamics of supply chain become top-of-mind in this age of instant gratification, businesses are at an existential crossroads. Their so-called “operators” are their secret weapon to maintaining a competitive edge. Given this environment, it’s clear that supply chain professionals are poised to become the most powerful executives in the world, overseeing the heart and soul of global commerce and transforming the way companies run.