When Tim Cook, the new chief executive of Apple, launched the iPhone earlier this month, it was widely considered a damp squib. In an industry that is big on hype and marketing, the low-key approach adopted by the successor to Steve Jobs was seen as a slight disappointment.
But the promotion of an expert in the quiet but critical world of supply-chain management may have been one of Jobs’ most astute moves. In a globalised market, where the delivery of goods at high-speeds and low costs through storms – both financial and natural – is a priority, operational expertise is increasingly crucial.
As a result, the promotion of supply-chain managers to board level positions has become a growing trend.
“It’s changed significantly,” said John Manners-Bell, analyst at Transport Intelligence, a consultancy. “Operational experts were always the poor relation in the corporate hierarchy. Now, supply-chain bosses are winning their way to the top of the pile.”
Kate Allum, for example, moved as head of supply chains at McDonald's to the same role at First Milk in March 2009, taking over as chief executive last April; John Bilbrey was promoted from supply chain supremo to interim chief executive at Hershey, the chocolate maker in May; and Brian Slobodow, chief executive of the mining company US Silica, had been vice-president of global supply chain at Johnson & Johnson.
One of the reasons operational experts are being dragged out of back offices is that supply chains have become more complex and far reaching. With growth in developed economies stagnant, companies are increasingly pushing into emerging markets where they are more reliant on third party suppliers.
Lucy Harding, head of procurement and supply chain management at Odgers Berndtson, the headhunter, says operational experts are gaining status because the risk of getting the logistics wrong can be so catastrophic.
Last week, for example, Supergroup, the clothing company, announced that a supply chain problem in its warehouse management system had led to problems shipping customers’ orders and a significant loss of sales, resulting in a 30 per cent drop in the share price.
“If there is a problem in the supply chain, it can become very visible, very quickly,” says Ms Harding. “It depends what your suppliers are doing for you. But, if for example, your suppliers are sourcing the chemicals in your pharmaceutical products, it’s crucial to get it right.”
Another driver is the recession, where supply-chain improvements can be key to cost saving. “When it is tough to gain market share and consumer confidence is fragile the only way to drive efficiencies is through the supply chain. Materials will be one of the biggest costs and managing your inventory and making sure your footprint is optimised is crucial,” adds Ms Harding.
Jo Sands, a consultant for Interim Partners, which places short-term managers in companies, says she has also seen an increase in demand for candidates who have a solid operations or supply chain background over the past two years.
“The current market conditions have created the ‘perfect storm’,” she says. “Traditionally, chief executives have come from a sales and marketing background, but today it is all about absolute value and as supply chain is the spine of the business it is core to realising value.”
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