Operations: A CEO-Level Priority In 2022

Companies operating within the persistent and ever-evolving constraints over the last two years have had to fast adapt new levels of productivity and customer connectivity.  

Leading retailers increased their e-commerce capabilities and evolved product and procurement strategies to meet customers consumer demand. Real-estate and healthcare companies introduced entirely new remote-service models. Production lines achieved record levels of availability and output: at one automaker, physical-distance measures actually increased productivity.

While it’s been striking how well and how fast many companies have adapted, in many ways, this is just the tip of the iceberg for operational challenges ahead. And those challenges call for C-level attention.

Business leaders are facing new social imperatives, like the tidal wave of environmental regulations pushing companies to take responsibility for the impact of their wider value chains. More than 130 countries that have now pledged to achieve net-zero carbon emissions by the middle of this century or a little after—and 23 will bans sales of fossil-fuel-powered cars over the next three decades, starting with Norway in 2025.

The labor challenge is also set to become more acute. The pandemic has accelerated the automation and digitization ambitions of many organizations, with knock-on effects on their current and future skill needs. Research predicts that one in every 16 workers will need to transition to new roles by 2030. If those estimates prove right, employers have a massive task ahead of them in reskilling and upskilling workers.

CEOs can’t afford to take a watch-and-wait approach, as their organizations go from one operational disruption to the next. But architecting the new operations agenda will require companies to sharpen three core capabilities: monitoring for early indicators of supply chain disruptions, establishing dedicated plan-ahead teams responsible for agile responses to emerging situations, and creating the infrastructure for an internal nerve center to support the preemptive and real-time handling of high-risk disruptive events.

These attributes can’t be bolted on to brittle, inflexible, and often slow-moving operating models. Instead, they must be built into the organization’s structures, processes, and people. In this capacity, the CEO serves as the catalyst for transformation, supporting business operations leaders and engaging the full senior-leadership team.

CEOS can set their organizations on the right path with a focus on three critical starting points:

• Setting up resilient, risk-tolerant supply-chain structures that abandon outdated ideas about centralization and scale: Companies with leading-edge supply chains have started creating “supply-chain nerve centers”—digital, end-to-end control towers that span functional silos, helping to improve risk tolerance.
• Doubling down on digitization with bold investments designed to achieve a truly end-to-end vision of what the future promises: The latest advances, for example, offer new solutions for running supply and demand scenarios, monitoring many layers of supplier networks, accelerating response times, and even changing the economics of production.
• Achieving real agility throughout the organization via better real-time visibility and systematic responses to external developments: Creating a comprehensive view of the value chain through detailed sub tier mapping of the supply base is the third and most critical step to identifying hidden vulnerabilities that could increase the impact of disruptive events.

The Covid-19 crisis lifted operations-related issues to the top of the senior-leadership agenda. There’s good reason for them to stay there. The transition to the post-pandemic economy is already testing the operational resilience in multiple industries. The transition to a low-carbon economy is set to test them even further. And all this volatility is continually opening new value pools for companies that move with speed to seize them.

Thriving in a next normal that promises to be anything but “normal” requires organizations to be on the front foot by building supply chain resilience, digital capabilities, and the workforce of the future.

 

This article was written by Curt Mueller from Forbes and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to legal@industrydive.com.