That was not the word I expected to hear at the recent conference hosted by Supply Chain Insights, Imagine: The Supply Chain of the Future, especially when CEO Lora Cecere opened her keynote with the observation that most companies have supply chains that are “stuck at the intersection of operating margins and inventory turns.”

However, empathy was in sharp focus throughout the two-day event. As it turns out, what ails supply chains is what ails most businesses these days: effective leadership. Yet, in the quest for supreme efficiency, organizations have placed their focus on well-defined, tightly-controlled projects and practices operating within tall silos that even the most powerful CEOs have difficulty managing.

Dr. Laura D’Andrea Tyson delivers the opening keynote of “Imagine: The Supply Chain of the Future” on September 10, 2014.

That is not to say that good project management and efficiency aren’t important. But they are only important in the context of a well-understood system, which is inherently complex, requiring ‘end-to-end’ management, even as it loops back on itself, as in the most sustainable of systems, and begins again. The best supply chains are agile and responsive; they don’t just react, they sense. They are characterized by balance, strength, and resiliency, of which the most critical element is effective leadership.

Dave Biegger, Senior Vice President of Global Supply Chain for Campbell Soup Company, is familiar with the importance of effective leadership in developing strong supply chains. Commenting on the significant progress his company made between 2006 and 2012, Biegger said: “We had great people, but it was complex and fragmented. New leaders focused on leadership and engagement, because if you don’t have the right kind of leadership, you won’t make the progress you want. We had to transform the supply chain to a demand-driven supply network. That changed the behavior and mindset—from parochial to holistic.” By increasing agility in the end-to-end supply chain, a new leadership paradigm enabled the company to deliver equal or better quality to the customer with a significant reduction (35%) in assets at a lower cost.

Dave Biegger, Senior Vice President of Global Supply Chain for Campbell Soup Company, discusses driving supply chain process improvement.

It turns out a holistic focus on service can deliver value to the customer and the bottom line .

Josué Muñoz, Vice President of Global Customer Service and Logistics at Colgate Palmolive—one of the conference’s featured “Supply Chains to Admire”—agreed especially with regards to leadership. “The first [part] is caring—and we have a strong value for that. The second is empathy—putting people in other people’s shoes—and understanding the implications for the whole system.”

“The first [part] is caring—and we have a strong value for that. The second is empathy—putting people in other people’s shoes—and understanding the implications for the whole system.”

This focus on talent and leadership was especially evident during the discussion surrounding the findings of Supply Chain Insight’s research: the single biggest talent shortage in supply chain is middle management.

A panel including representatives from Dow Chemical, IBM, and APICS conferred on talent as the “missing link” in the evolution of supply chains. Allison McFadden of IBM discussed the insight that came from realizing that deep functional expertise without the necessary cross-training to build context and appreciation for the whole system was not just sub-optimizing, it was counterproductive. “What we had to do was break down the silos on the metrics, and prioritize according to the client-centered metrics. We also worked to develop not only job rotations, but cross-functional projects to build empathy and understanding.” The resulting ‘T-shaped’ model for talent development in their supply chain focuses on business analytics and acumen, change management and transformation, leadership development, and effective communications.

Allison knows firsthand of the power of developing leadership and empathy as a participant in IBM’s Smarter Cities Challenge, an initiative that contributes the skills and expertise of IBM’s top talent to address critical challenges facing cities around the world—at no cost to the city—while providing participants with leadership training and talent development opportunities.

Allison McFadden of IBM discusses the importance of talent in the next evolution of supply chain along with Sharon Rice of APICS, Philippe Joffroy of the Dow Chemical Company, and Bob Bowman of SupplyChain Brain.

So, what works in building the most effective supply chain to serve customers? Roddy Martin of Accenture reeled them off: leadership, building of talent, horizontal focus, and active and intentional design of the system. What doesn’t work? Project-based focus, vertical excellence, unchecked complexity, and perhaps most importantly, “pushing cost and waste backwards in the value network.”

This final point was especially salient, because for years that’s exactly what most companies did. Dr. Laura D’Andrea Tyson, Director of the Institute for Business and Social Impact at the Berkeley Haas School of Business, clarified the context for the modern-day supply chain: “Eighty percent of the global population is in emerging market economies, and account for 38 percent of global flows and 40 percent of global output.” It’s very difficult to design and manage an effective supply chain without a global perspective and understanding. For years, marketing and sales professionals moved beyond the fence line to understand the complexity and contexts of customers and markets. Now, supply chain professionals need to do the same.

The supply chains of the future are economically, environmentally, and socially sustainable—for all parties. Leading through service, putting the customer at the center, optimizing a whole, complex system with discipline, and most importantly, consciously creating an atmosphere of continuous learning and innovation are at the heart of a sustainable supply chain.

“Don’t get blinded by what you think you know,” said Dave Biegger. “Keep learning.” In the final analysis, most agreed: empathy is the best teacher.

Photos courtesy of Supply Chain Insights LLC.

Laura Asiala

Laura Asiala is the Senior Director, Client Relations and Public Affairs at PYXERA Global. Passionate about the power of business to solve—or help solve—the world’s most intransigent problems, she leads the efforts to attract more participation of businesses to contribute to sustainable development through their people and their work. She also serves on the Board of Directors for Net Impact, a community of more than 40,000 student and professional leaders creating positive social and environmental change in the workplace.