Tyndall Says:

Most companies that are known to have outstanding supply chains have either a CSCO or one, in effect. What do you say? Send us your comments here

We have mentioned earlier the apparent rise in the title “Chief Supply Chain Officer” (CSCO).

I say “apparent,” as we do not yet have a definitive survey of the number or types of companies who have defined such a position and recruited for it.  Our SCDigest/Georgia Tech SC Executive Forum survey discovered that about 20% of fortune companies - in the fall of 2007 - had such a title;  however, this was based on a telephone survey of a relatively few number of companies.

An interesting question has arisen lately in my discussions with various C-level executives; that is, what is the difference between a “COO” and a “CSCO”?  Does it matter which title we use? 

While we do not have “perfect answers” or “perfect information” to reply to this on a general basis (we take each situation by itself in our advisory work), there are a few principles we can offer for consideration. 

First, consider the trends and practices.  Over the past 3-5 years, the number of COO positions has dropped.  As Sarbanes-Oxley took hold, and CEOs were held more personally accountable for business operations, their involvement in the business has had to increase.  Thus, the complete needs for a COO have lessened.  Moreover, it is no longer possible for a CEO to legally defer to a COO for operational problems or issues.

Second, with this decrease has come an increase in the CSCO position.  Perhaps the two are related; however, those of us in the supply chain profession know all too well that integration, collaboration, and supply chain performance are horizontal, interdisciplinary, and cross-process.  Someone, or some executive body, must insure this takes place.

Third, the lack of a “wave” of new CSCO positions, however, must indicate that either some other body is accountable for this role; or, the company does not understand the value of the role.  Both seem to be the case, in our experiences.  Some companies have an executive committee that has on its agenda the integration of supply chain-like processes;  others just expect that their business un it leaders are coordinating;  while others just do not understand  well enough yet the value of supply chain excellence to profitable growth.   

Fourth, when these latter companies do start to “get it,” they debate the question raised above – i.e., should we appoint a COO or a CSCO?  The COO position – revisited – carries the same concerns that led to its falling out of favor (accountability).  Yet the CSCO position, being new, carries with it multiple questions of scope, responsibility, risk, and legal issues.

Fifth, the issue involves more than semantics.  The questions of scope, responsibility, risk, and legal concerns – coupled with company culture – can make this debate challenging.  Typically, a COO has under him/her all the operations of the business, which normally include buy (procurement); make (production or sourcing); move, store, and deliver (logistics). 

While this is somewhat typical for a COO position, we do see variances.  Sometimes the COO will also have sales; finance and accounting; R&D; information technology; or other processes.  Sometimes the position will only have new products, R&D, fulfillment, or something similarly restricted.  Most often, however, the COO is internally focused.

The position of CSCO, however, can be more clearly defined (not that it always is).  When we take the mega processes of:  buy; make; move; and sell (we will not debate sales here, only customer satisfaction), we envision a CSCO who leads all of these.  This includes working with trading partners – the key to supply chain excellence.  We know that global supply chain excellence involves from “supplier’s suppliers to customer’s customers,” which obviously means far more than internal integration and excellence.

What about strategy, people, process, and technology – the four pillars of supply chain excellence?  Strategy is not set by supply chain management; yet the operations strategy must enable the business strategy.  People are very definitely a key responsibility of the CSCO, as only the best people can design and sustain the best supply chains.  Processes, for sure.  Technology?  It obviously includes more than supply chain systems….but, it can be argued that 75% or more of the applications support or enable supply chains, so we had better make this process integrate closely.

Some industry examples point out the value of a CSCO.  The impressive Lucent turnaround was led by a CSCO. The global and broad-based IBM transformation was led by and yielded a CSCO.   In fact, most companies that are known to have outstanding supply chains have either a CSCO or one, in effect.  Many companies that have a COO do not.

It is difficult not to project that the number of CSCO positions will increase over the next 2-3 years, especially as companies struggle with globalization.  The scope of global supply chains is simply too large for VP-levels, Chief Procurement Officers, or Chief Logistics Officers, to lead.  And, too often the COO position has other responsibilities to manage.

One final point.  Appointing a CSCO sends an important message to customers.  After years now of “maximizing shareholder value” – what message does this send to customers?  It is time to make certain they know that we are in this together. The CSCO position, properly defined and recruited, can make a major difference in the critical battle for customer satisfaction.

Agree or disgree with our expert's perspective? What would you add? Let us know your thoughts for publication in the SCDigest newsletter Feedback section, and on the web site. Upon request, comments will be posted with the respondents name or company withheld.