The Deep Purpose of Supply Chain Management (SCM)

While reading harrowing news every day from across the world, some quite specialized terms such as ‘ventilator’, ‘ICU’, ‘lockdown’, ‘quarantine’, ‘PPIs’, and ‘curve’ are becoming very common in our daily conversations with family, colleagues and friends (through Zoom or Teams of course!). At the same time, suddenly, a set of supply chain related terms such as ‘stock out’, ‘shortage’, ‘availability’, and even ‘supply chains’ are being widely used by journalists, authorities, and politicians, among others. Google Trends seems to confirm this impression by describing the popularity of volume searches on Google for these supply chain related terms:

And, not strictly speaking a supply chain term, but quite pertinent at the moment is TP:

More relevant impacts

However, there are many more relevant aspects associated with this web and media resonance. One of them is full public recognition of the pivotal relevancy of supply chains to our society. Perhaps now more than ever in human history, the supply chain’s role is widely being recognized by citizens, communities, politicians, and even families. The ‘availability’ of products, especially healthcare equipment, medicaments, and food, among others, becomes a visible key driver -that always has been- to sustain the quality of life of people. 

Moreover, what is becoming very tangible as well, is the heroic contribution of supply chain front-line agents such as hospital and pharmacy staff, truck-drivers, cashiers, shelf-fillers, manufacturing, logistic and warehouse workers among others. They are supporting, -sometimes at the risk of their own health or even life, vital operations to ensure that products are available to everyone ‘at the right place and at the right time’. Without them, the already impacted global supply chain flow of equipment, medicaments and food, would be even more critically disrupted. 

Let's talk about Purpose

Based on these arguments, I think this is a crucial time to reflect, re-discover, or really understand the deep purpose of Supply Chain Management (SCM). One starting point for this reflection perhaps is to clearly define the term ‘purpose’ and differentiate it from other terms, such as ‘objectives’ and ‘goals’.

According to one interesting interview in the Harvard Business Review, Prof. Nicholas Pearce defines purpose as ‘the reason why someone or something exists’, in a word, the ‘why’. And this ‘why’ should be differentiated from the company’s ‘what’ and ‘how’. While a ‘goal’ is a point that a company wishes to achieve, the ‘what’, the ‘purpose’ is the reason why a company aims to reach that goal, the ‘why’ (i).

From the World Health Organization

One insightful input for this discussion is Dr. Michael Ryan’s interventions during the World Health Organization’s daily press briefings. Being a highly recognized and experienced epidemiologist, he has a profound and pragmatic understanding of supply chains. Usually, he dedicates a meaningful section of his very instructional interventions to inform us about SCM issues. A couple of weeks ago, he said: “Health workers potentially will die because they don’t have personal protective equipment. It is a huge responsibility to protect the supply chains for health workers around the world, and we should have solidarity between governments, manufacturing producers and others to ensure that our bravest [health workers] get the best possible protection” (ii).

In a few words, people may die, and painfully are dying now, around the world because they do not have the right materials and quantity of them at the right time and place. It then becomes clear that stock availability (service) and solidarity among actors (visible collaboration) are critical drivers to a deeper purpose. His purpose is to protect the vulnerable people in that chain [health workers]. SCM’s purpose has always been, but perhaps now more tangible than ever, a matter of life or death.

From US Corporations and CEOs

Also, you may think that a deeper purpose for SCM may be reserved only for non-profit organizations. However, even the Chief Executive Officers of nearly 200 major U.S. corporations, such as Jeff Bezos from Amazon and Tim Cook from Apple, have verbalized a significant switch in their vision about the purpose of their organizations, and their supply chains.

In a document titled ‘Statement on the Purpose of a Corporation’, they officially rejected the idea that the primary purpose of their corporations is only to serve their shareholders and maximize their profits. Instead, they understood that “investing in employees, delivering value to customers, dealing ethically with suppliers, supporting outside communities, and generating long-term value for shareholders” are now factors at the forefront of American business.

This declaration may seem idealistic rhetoric, but coming from this group of US corporations and CEOs, it communicated two powerful messages to the business and supply chain community:

1. A corporation’s purpose, and the Supply Chains within them, is to serve all people in the chain (Purpose) by delivering value and support (Goals).
2. Shareholder value is not everything, and shareholders are not the only stakeholders.

From Personal Experiences

I have plenty of close experiences with Supply Chain leaders and practitioners that recognize a deeper purpose for SCM. To offer a tangible example, while attending a Supply Chain Conference last year in Amsterdam, I listened to a presentation by Barry Anderson. He is a Planning Specialist at Coca-Cola Beverages Africa, who led a profound demand-driven transformation in this company. His presentation was meaningful because he was not only focused on significant, but sometimes a bit cold, numbers, results, and technology enhancements. Instead, his main focus was on people. He presented video testimonials from Planners and Planning Managers spread across various countries and cultures in South and East Africa. From my perspective, this presentation and implementation were both purpose-driven. They were centrally focused on people’s thoughts and feelings, rather than only on improved service and inventory levels.

Some Conclusions

Based on these arguments, I firmly believe that there is a deeper SCM purpose beyond pure ROI, profit or cost optimization, improved flow, synchronization, availability, and even value delivery. I think, in the end, all of them may be vital goals that should be aligned to reach a deeper purpose.

In my view, the Supply Chain Community, especially in the profit-driven organizations, is often implicitly recognizing a more profound purpose to its speeches, writings (iii), decisions, and praxis. However, it is not always clearly identifying and articulating it on our Supply Chain methods and practice. Most of our Supply Chain departments, meetings, discussions, improvement projects, transformations, KPIs, metrics, and implementations are usually still mainly goal-driven. Perhaps, we understood that by delivering value, we are automatically protecting and serving people. Or maybe, we are just confusing deep ends with suitable means.

But, let me be clear: I am not advocating here that we forget financial performance or shareholder value as critical goals. I am promoting a more comprehensive, more profound, and perhaps more effective vision of SCM practice, a purpose-driven one, that as I have tried to demonstrate, is already present in our community.

Based on Dr. Mike Ryan’s comments, I firmly believe that the deep purpose of Supply Chain Management is to serve all the people in the supply chain, but especially the most vulnerable ones. I think this sincere recognition, while still abstract, could help us to not only clearly understand our contribution as Supply Chain Professionals (managers, practitioners, cashiers, retail assistants, authors, and consultants) to society, but even to our environment. It could even improve our performance and outcomes as we understand the crucial role of people, not just as the vital end of our work, but also as the key driver for improvement, success, and sustainability.

These are some thoughts. Please feel free to share yours. We need to stand purposely, together and safe!

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(i) These definitions are aligned with Simon Sinek’s ‘golden circle’.

(ii) COVID-19 World Health Organization’s daily press briefing of 20th March 2020 (from 30’ to 35’).

(iii) As matter of fact, Harvard Business Review contains plenty of articles related to purpose-driven organizations. ‘Reinventing Organizations’ by Frederic Laloux is very aligned with this vision when presenting the ‘Teal Organization’ case. However, it was a bit more difficult to find SCM related articles aligned with this vision. However, further research may be done on this point.