Why CEOs are getting hands-on with their supply chains

Much of the pressure on supply chains has now abated, certainly compared with the height of the Covid-era crunch. Transit times and the costs of logistics, energy and raw materials have all been gradually trending back towards more normal levels. It’s bound to be a relief for supply chain professionals and procurement leads.

But that doesn’t mean everyone’s feeling relaxed. In fact, CEOs still seem to be particularly concerned about the health of their supply chains, dedicating a significant chunk of their time to fighting fires and boosting long-term resilience, according to a survey of UK and US bosses by consultancy Proxima./

So, what does this level of C-suite concern mean for supply chains and the teams responsible for managing them? Where might CEOs be looking to make changes?

So, even though inflation is tempering in most markets and much of the recent supply chain disruption has tailed off, it’s clear that CEOs are still spending a significant amount of time thinking about supply problems. Nearly two-thirds (64%) of CEOs expect to spend between 5% and 20% of their time on supply chain-related issues. As many as 17% will spend even more – somewhere between 21% and 50%.

It’s more of a problem in some sectors than elsewhere, too. A quarter (25%) of CEOs in the packaging and distribution space, for instance, expect to spend more than 20% of their time on supply chain matters, compared with less than 10% of biotech CEOs reporting the same level of focus.

And the situation is worsening, if anything. Compared with last year, more than half of CEOs have now stepped up the amount of time they spend addressing their supply chains.

Whether this increased focus on supply chains is down to CEOs seeking cost-savings by re-examining their relationships with suppliers, or exploring possible ways to diversify and secure their supply chains against future disruption, this rise clearly reflects a significant degree of concern. For instance, 90% of the CEOs surveyed identified supply chain resilience as a key challenge for their business over the next 12 months.

One of the main priorities for these concerned CEOs is exploring the idea of near-, friend- or on-shoring. For example, nearly half are reportedly considering on-shoring as a means of securing their supply chains against long-distance disruption.

Whether such a strategy will even work, though, is still up for debate. And it’s not as though improving resilience is the only supply chain focus for CEOs.

Human rights, along with other ESG issues in the supply chain, remain a persistent concern. That’s especially true where businesses are hoping to get serious about business ethics.

For instance, the decarbonisation of the supply chain is also gradually working its way up the agenda, as more and more business leaders wake up to the problem of Scope 3 emissions.

These challenges will take plenty of in-depth, dedicated work to solve. But there’s at least one upside to CEOs taking a lead themselves, in that supply chain problems of this kind are now considerably more likely to receive top-level airtime and attention in the months ahead. It’s an opportunity to clear some internal logjams and make genuine improvements to the health of businesses’ supply chains.