Approximately 20 CEOs and board members from as many Fortune 500 / Global 2000 companies inaugurated THE CEO ROUNDTABLE ON THE NEW SUPPLY CHAIN, joining peers in a gathering of some of the world’s top business leaders to discuss the necessary transformation of supply chains to meet an increasing number of urgent challenges, with deep emphasis on sustainability, resilience, innovation and risk management.
The companies with which the attendees work account for approximately a trillion dollars in revenues and millions of employees.
The meeting was conceived and organized by Pat Russo, former CEO of Alacatel/Lucent, board member at GM and Merck and current chair of HPE; Maggie Wilderotter, former CEO of Frontier Communications and board member of Costco and Lyft; Raj Gupta, former CEO of Rohm & Haas and current chair of Aptiv; and Subhash Makhija, a passionate advocate for sustainable supply management and CEO of GEP, a global provider of supply chain services and software and sponsor of the event.
Attendees shared their personal perspectives on a variety of issues. Nothing in this summary or anything stated during the meeting represents the opinions, position, policy or in any other manner should be interpreted as speaking for any company that was represented in the meeting. All statements are the opinions of the individuals and were not made in their capacity as an officer or executive of any organization or company.
The day’s work began with recognition that the aims of corporations — beyond maximizing shareholder value — are increasing in discussion among social, cultural and political constituencies and, in particular, among younger demographic groups such as millennials, who are now maturing into the leadership roles that are in large part dominated by baby boomers.
On the whole, the assembly recognized the rising impact of new factors, commonly referred to as ESG (environmental, social and governance), on corporate strategy, operations and objectives. In particular, the rising drumbeat around aspects of climate change, as well as the heightened impacts now more frequently perceived and substantially reported, have put sustainability in the spotlight with supply chain resilience.
The pandemic, the group agreed, had catapulted the supply chain and its vulnerabilities into the consciousness of our families, communities and businesses, as well as the leaders of our largest and most powerful global corporations. Supply chain disruption, whether stemming from severe weather and climate-related events, political and military conflict, or social unrest and instability, has not only been thrown into unprecedented awareness but is also driving fear and thus volatility.
At the same time, innovation — and, in particular, innovation in digital information and communications technologies — is opening up new opportunities for better, more nimble and more accurate supply chain awareness, planning and management.
A consensus of participants agreed that these possibilities must be seized, and that change requires informed and purpose-driven action by an organization’s core and senior-most leaders: the board, the CEO and the C-suite. GEP’s Makhija outlined a vision of the new supply chain — resilient, real time and net-zero from a carbon perspective — which, he said, would not only result in improved business dynamics but also render the world a better, safer, healthier and more productive place to live.
Most of the attendees supported the 2019 Business Roundtable Statement on the Purpose of a Corporation, which declared that businesses had fundamental commitments to multiple essential stakeholders, including customers, employees, communities, suppliers and shareholders. The statement, among other things, committed its signatories to fostering diversity and inclusion and protecting the environment by embracing sustainable business practices. There was good debate on the role and responsibility of boards and CEOs as they relate to broader environmental and social issues.
While many leaders agreed on the urgent need for more sustainable solutions, they also expressed caution in overextending their reach and aspirations beyond their own value chains. There was recognition of the role of policymakers and government in catalyzing action, as well as support for the role of industry associations in creating more consensus and extending the impact of sustainability efforts beyond the individual efforts of companies simply acting on their own.
Again, there was no consensus on this issue; however, most attendees agreed that not much has been done since the 2019 Statement and more discussion is required around the purpose, role and responsibility of the corporate executive in society.
Most attendees are committed to the 1.5 degrees goal of the Paris Agreement and have aligned their own corporation’s objectives toward net-zero greenhouse gas emissions over varying time horizons ranging from 2030 to 2050. However, most attendees acknowledged that the targets represent only Scope 1 and 2 emissions, and few had any definitive grip on Scope 3 emissions. The group discussed the challenges and the need to measure, track, report and influence Scope 3 GHG emissions as they represent the vast majority of a company’s impact on emissions — from 70-80% depending on the industry and sector.
The automotive industry was discussed as one role model for innovation, with leaps in the EV space resulting in a aster-than-expected transition toward sustainability goals. A similar innovation in the high-tech industry was discussed where the innovation is built into the business model – providing customers energy-efficient cloud solutions where they can reduce their emissions by 30%.
A majority of attendees said they’ve seen inventory levels increase intentionally, as the overall impact of product shortages is often substantially greater than the cost of carrying inventory. Many of the companies they are associated with are moving away from just-in-time (JIT) strategies to a just-in-case (JIC) mindset.
Attendees agreed that what is happening in Ukraine is deeply disturbing. There was consensus that the war will exacerbate inflationary pressures, perhaps leading to increase in prices of commodities such as aluminum, palladium, and nickel, and creating impediments to green energy transition in the short term.
Several attendees agreed that there is a need for end-to-end, data-centric digital supply chain management systems that can connect demand with supply faster and more accurately, providing real-time visibility and leveraging AI and predictive analytics. There was consensus among participants that new supply chains themselves will be increasingly data-driven and managed in real time.