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Route to Market & Supply Chain Blog

FMCG Company disbands the Supply Chain function……..

Posted by Dave Jordan on Wed, Mar 23, 2016

I am back on line again after a few days’ holiday post completion of some challenging factory footprint project work. One of the first catch-up meetings I have had was with an FMCG CEO. No names of course, but this is a medium-large sized player knocking on the blue-chip door. The company has a broad European supply network and is present in most markets. I have disguised the identity to protect the innocent or not so innocent!

I recall how many companies plodded along blindly with what we now accept as supply chain functions dispersed around other departments, e.g. procurement/buying and logistics in finance, planning with sales – I, along with many, am so pleased that the latter is no longer the case!

Many years flew by before all the essential elements of supply chain were brought under one organisation. Looking backwards now, it hardly seemed like rocket science but it was a painful process as established empires were dismantled and begrudging recognition given to what is still an undervalued function in a large number of companies. How many actually have a Chief Supply Chain Officer even now?

Although many were dragged kicking and screaming into the newly created function, there is no doubt those companies operating an integrated supply chain have seen huge benefits over succeeding years. Nothing happened overnight of course, as slowly but surely companies made massive strides in understanding cost, efficiency, service and innovation. Is it naïve to believe that supply chain is now considered equally important as say finance or those darlings in sales? The jury is probably still out on that one.

FMCG_SUPPLY_CHAIN_CEO.jpgSo, you could imagine my jaw dropping onto the worn leather inlay of the table when I heard from Mr./Mrs. CEO that this company had taken the decision to dissolve their supply chain and relocate elements across the other departments. The Supply Chain Director role just vanished off the top table in one fell swoop. Without doubt, there must be a leading edge reason for this bold and brave (yes, insert “crazy” or “stupid” or “daft” as you wish) move and I waited for the disclosure of the divine inspiration and associated logic.

No, there was none on offer in my humble opinion. The insight behind the decision was that the company wanted more direct board control over various areas of business and believed that a dispersion of roles was required. The fact that segregation of roles is necessary for auditable control and accountability has been at best over-looked let alone the impact on business performance.

The only outcome is a lack of cross functional clarity on how the Supply Chain contributes to business performance excellence. A return to functional silos where people will not take responsibility or be accountable and resort to lobbing blame-grenades over the office walls.

Why would you make such a decision? What are they really hiding from? Answers on a post card please as this one beats me. I am not suggesting supply chain development has finished and we have the ultimate design (far from it) but reverting to a disjointed 1980’s model in an effort to improve control is a contradiction.

Image courtesy of Stuart Miles at freedigitalphotos.net

 

Tagss: FMCG, CEO, Performance Improvement, Supply Chain