During my tenure as supply management editor, advisor, analyst, and now solution provider, I received countless questions on strategy and technology. One common inquiry: How do I convince C-level executives of the importance of supply management?

In his book Straight to the Bottomline, Supply Excellence contributor Doug Smock offers sage guidance on how supply managers can appeal to the business sense of CEOs and CFOs, laying out a mathematical framework for Return on Invested Capital (ROIC) that links supply improvements to the company’s financial performance. The arguments made by Doug and his co-authors are so clear cut and compelling that they are almost criminal for an executive to ignore. (In his keynote address at Empower 2006, Doug will share more of his research and recommendations on ROIC and supply management metrics.)

Despite such evidence, many senior executives fail to recognize the magnitude of supply management’s impact on profits, performance, and competitive advantage. It is with this dilemma in mind that I only half-jokingly suggest a radical strategy to gain the attention of the C-suite: illustrate how supply management affects their personal lives.

I’ve been stockpiling examples of supply-lifestyle links. Here are just a few that you might use to catch the attention of your CEO:

Price increases for raw materials could boost your handicap

Commodity managers are no strangers to the rise in metals prices. But it is two specialty materials – titanium and carbon fiber – that could sting top executives. Producers of these materials are trying to hold down prices for their biggest customers, such as aerospace giant Boeing, which has shored up more than one-third of available titanium supply to support production of its white-hot 787. That means material price increases will be passed onto smaller customers, such as manufacturers of golf clubs, specialty cycles, boats, and other recreation equipment. The result: senior executives will be paying more for that new titanium driver that promises to cure slices and add 20 yards to your drives.
 

Supply risks may decrease the sour your social status

The rise in low-cost country sourcing has exposed supply chains to greater risk of supply delays and outages, quality glitches, and counterfeit goods. Now supply risks are threatening a new victim: the wine snob…er…connoisseur. A recent Wall Street Journal expose found that globalization and advanced printing technologies are fueling a rise in wine counterfeiting. Targeting the world’s top wines, counterfeiters have formed elaborate global supply chains, importing and blending lesser varieties of grapes and creating bottle and label replicas that are indistinguishable from the genuine item. According to the article, millions of dollars in phony wines gets detected every year. Execs that pride themselves on stockpiling fine wines may find the value of their collections (and their status as a wine aficionado) depreciating quickly. 

Supply Issues Are Boosting the Cost of Luxury

Rising fuel and material prices have hit the elites harder than the masses. Accoring to Merrill Lynch Chief Economist David Rosenberg’s “Wall Street core-inflation index,” prices for the items top executives (and their spouses) like to buy are increasing at double the pace of inflation for items bought by commoners like us. The index tracks price increases for a wide range of luxury goods and services, including alcoholic beverages consumed away from home; hotels; housekeeping; lawn-care services; jewelry; airfare; pet services; sporting goods; medical care; recreation; elementary, high-school, and college tuition; dry cleaning; and legal and financial services.

Overall the inflation index for these items is up 4%, double the consumer price index that applies to purchases made in the “general” economy. Those items showing the biggest price jumps, gardening/lawn care services and private school tuition are up 7.7% and 5.9% over the past year. Sounds like execs will need to let the grass grow a bit longer or send the kids to (gasp) public school.

My comments are meant to be a toungue in cheek way of saying, supply management professionals need to brush up on their marketing skills. If you can draw corollaries between supply market events and the issues that are atop C-level execs’ minds (e.g., profits, innovation, risk, compliance) you’ll be able to secure the support, resources, and buget you need to drive any supply management improvement initiative.

Empower 2006 keynote Dave Anderson, Managing Director of white-hot venture capital firm Supply Chain Ventures and former global managing partner for Accenture’s Supply Chain Consulting Practice, will be sharing secrets on How to Make the Perfect Pitch for Any Supply Management Initiative. As a VC, Dave sees a hundred pitches a year, so his session (and his no-holds-barred edgy tone) should make for an informative and entertaining speech. To attend, click here.