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The COO Is Watching Your Supply Chain

Chief operating officers wield enormous influence over the decisions that affect supply chains — decisions that can either garner financial success or crimp revenue prospects for the company. The appointment of COOs often helps to reassure management, as well as investors, that the company’s business decisions and operational models are sound — even when the dynamics of the competitive landscape are changing.

That was the case on February 22, when {complink 1131|Cisco Systems Inc.} announced that it had appointed executive vice president Gary Moore to the position of chief operating officer, a new position within the company. Moore’s responsibilities include overseeing the engineering, marketing, operations, and services organizations within Cisco. He will also align and prioritize company investments and ensure operational excellence across the company, Cisco said.

But more importantly, Moore’s appointment was a move to help calm the frayed nerves of investors, who were becoming skeptical about the company’s near-term prospects as Cisco continued to manage a more diverse portfolio.

Over at {complink 379|Apple Inc.}, Tim Cook, the company’s COO who's credited with streamlining Apple’s supply chain operations, is filling the CEO spot for Steve Jobs, who's on a medical leave of absence. It's the third time Cook has filled in for Jobs under similar circumstances. This example demonstrates that the COO position, with its supply chain responsibilities, plays a significant role in projecting confidence, direction, focus, and an air of stability.

By the same token, a COO who is unsure about his company’s vision in a shifting global marketplace — and lacks the ability to make decisions that strengthen operational capabilities — will weaken the company’s chances of success. Given that a COO’s decisions have a direct impact on the supply chain, I was troubled by the finding of a report, recently published by {complink 21|Accenture}, titled The Future of Electronics and High-Tech: Developing International Operating Models for the Next Era of Competition.

Based on interviews conducted with thirty COOs representing enterprise communications and consumer technology companies, the report provides insights into how COOs view supply chain-related business operations at electronics and high-tech companies. The report highlights the areas of business that are important to the COOs, the extraordinary challenges their companies face, the gaps between supply chain planning and execution, and the need to create solutions for activating change.

According to the report, executives understand the importance of global operations. 75 percent of COOs say they are making global operations a priority in the next three years, but this is to make up for other areas that are lacking. For example, less than one-third (31 percent) strongly agree they are leveraging their global scale effectively; only one-fifth (21 percent) strongly agree they are well-positioned to respond rapidly and effectively to changes in the global marketplace; and just 17 percent strongly agree they are capitalizing effectively on their international expansion. Nevertheless, almost all (94 percent) say that they do have sufficient capital to execute their global strategy.

Another dilemma identified is how to implement measures that will mitigate the problems that come with skills shortages. More than half of the respondents surveyed (53 percent) said that developing and managing human capital is the most fundamental component for delivering a distinctive service to their customers. However, only 10 percent said finding new locations to scout for talent to improve innovation is a key driver in their company's skills development model.

Another clear disconnect exists between the need to implement technology to further develop a coordinated supply chain and the lack of investment in cutting-edge technology to support these efforts. The report notes:

    There is an apparent disconnect between what executives know is important and where they’re willing to focus attention. Seventy percent of the COOs we spoke to agree IT is critical for global operations, but only 21 percent say their IT is very capable of supporting their global operations. In fact, more than a third (34 percent) admits that their systems need improvement. Despite the need to share information and source ideas across a global firm, few electronics and high tech companies are using cutting-edge technologies to support this effort.

We can only hope that supply chain executives will listen to the concerns of COOs, but it's just as important for COOs to listen to supply chain executives who need the support of all C-level execs as they execute global supply chain operations. Furthermore, since COOs say there is money in the budget to do what needs to be done, they shouldn’t hesitate to back strategies to help their companies compete and win.

4 comments on “The COO Is Watching Your Supply Chain

  1. Jay_Bond
    March 3, 2011

    This is an excellent article. I was really unaware of the exact powers that COO's have throughout most companies. I believe it is important for the supply chain executives and the COO's to work together. Each one of them really helps out the other one. The better their relationship, the better it is for their respective companies.

  2. tioluwa
    March 4, 2011

    30 COOs who know their job is a good thing, but i doubt that all COOs operate with this understanding, else, things should be a lot better in most organizations. Jay_Bon hit the nail on the head when he states that “team work” is the key. no COO can do it alone, and no supply chain executive can do it alone.

  3. The Source
    March 4, 2011

    Tioluwa & Jay,

    Thanks for your comments.  It seems we all agree that high tech executives must coordinate their efforts, especially in an environment where changes occur at lightening speed.  These top executives have to make decisions quickly and effectively.  As the economy begins to rebound it will be interesting to see how decisions are made, and what role the COO plays in strengthening or weakening the supply chain. 

     

     

     

  4. itguyphil
    March 4, 2011

    He will play a major role in tightening the organization's financial belt and getting the different groups on track. So he/she will be shaking down the CFO and cracking the whip on all the other execs.

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