Supply Chain Management: What Every CEO Needs to Know
Supply chain management no longer belongs solely to operations teams. Nine in ten companies experienced supply chain disruptions in
Supply chain management no longer belongs solely to operations teams. Nine in ten companies experienced supply chain disruptions in 2025, according to McKinsey’s latest survey of supply chain leaders. Yet only 30% of boards have deep understanding of supply chain risks, and just 25% have formal processes to discuss these issues at board level. This disconnect leaves companies dangerously exposed. For CEOs, supply chain management has become a strategic imperative requiring direct attention, not a back-office function to delegate and forget.
The Board-Level Blind Spot
The biggest gap in supply chain management sits at the top of organizations. Most boards lack in-depth understanding of supply chain risks despite these risks threatening business continuity and profitability. Only one quarter of companies have formal processes to discuss supply chain issues at board meetings, down from nearly half in 2023.
This retreat from board-level engagement happens precisely when supply chain management requires sustained attention. Red Sea shipping attacks, European floods disrupting automotive production, and semiconductor trade tensions demonstrate that disruptions remain the norm, not the exception. Companies that moved supply chain discussions off board agendas during periods of relative calm now lack the governance structures needed when new disruptions emerge.
CEOs must establish regular board reporting on supply chain risks, not just ad hoc discussions when crises occur. This means quarterly updates on major risks, risk trends, and potentially disruptive events. It requires integrating risk analysis explicitly into sales and operations planning processes. It demands publishing quantitative risk indicators that boards can track over time rather than relying on qualitative assessments.
Visibility Beyond Your Direct Suppliers
Sixty percent of companies now have comprehensive visibility into tier-one suppliers, a significant improvement from previous years. But visibility into deeper supply chain levels has declined for two consecutive years. This matters because major disruptions often start deep in the supply chain, far from your direct relationships.
Companies take an average of two weeks to plan and execute responses to supply chain disruptions – far longer than the typical weekly cycle for sales and operations execution. This delay stems partly from lack of visibility into where problems originate. When a tier-three supplier faces issues, companies often don’t discover the problem until it cascades through the supply chain.
New regulations compound this visibility challenge. The EU’s Corporate Sustainability Due Diligence Directive requires companies to ensure all inputs comply with environmental and human rights standards. Only 9% of surveyed companies report current compliance, with 30% admitting they’re behind or significantly behind. These regulations demand visibility into supply chains that most companies simply don’t have.
CEOs should demand clear answers about deep-tier supply chain visibility. Can your team identify all tier-two and tier-three suppliers for critical components? Do you have systems to monitor their financial health, production capacity, and compliance status? Without this visibility, your supply chain management remains reactive rather than proactive.
Dual Sourcing and Regionalization: Progress Stalled
Seventy-three percent of companies report progress on dual-sourcing strategies, and 60% are regionalizing supply chains. These numbers sound impressive until you realize they’ve remained flat for two years. The momentum from COVID-19 disruptions has dissipated, leaving many companies with partially implemented resilience strategies.
Dual sourcing means maintaining relationships with multiple suppliers for critical inputs rather than depending on single sources. This provides alternatives when one supplier faces problems. Regionalization involves shifting production closer to end markets, reducing dependence on long-distance supply chains vulnerable to shipping disruptions, trade tensions, and geopolitical conflicts.
Both strategies require sustained investment and management attention. Companies that paused these initiatives after initial progress leave themselves vulnerable to the next disruption. The work isn’t finished just because the immediate crisis passed.
CEOs should review the status of dual-sourcing and regionalization initiatives honestly. Are projects actually progressing or just maintained on PowerPoint decks? Have you allocated sufficient budget and talent to complete these transformations? Halfway measures in supply chain management provide minimal protection while consuming resources.
The Digitization That’s Not Delivering
Two-thirds of companies are investing in advanced planning and scheduling systems, the backbone of modern supply chain management digitization. But only 10% have completed deployments. Worse, one-third admit they don’t have quantified business cases for these systems, and 15% say implementations haven’t met objectives.
This disconnect between investment and results stems partly from data quality issues. No company with deployed systems reports having perfect data, yet many are satisfied with system performance. This suggests companies should adopt the 80/20 rule: press forward with implementation once most data are available, with processes to fix gaps later. Waiting for perfect data before deploying digital tools means waiting forever.
AI adoption in supply chain management is accelerating but remains nascent. AI systems can automate analysis of multiple structured and unstructured data sources from supplier tiers, logistics providers, shop floor systems, and demand forecasting. They can create early-warning systems for potential risks by evaluating supplier financial information, weather forecasts, and social media traffic. These capabilities exist today but most companies haven’t implemented them.
CEOs should push digitization forward despite data imperfections while remaining realistic about implementation timelines. Complex system deployments take years, not quarters. Budget accordingly and hold teams accountable for progress, not perfection.
The Talent Crisis Nobody’s Solving
Ninety percent of companies lack sufficient digital talent to meet supply chain management goals. This number hasn’t changed meaningfully since 2020, suggesting current approaches aren’t working.
Companies initially turned to external hiring to fill talent gaps. By 2023, most favored market recruitment over internal development. But acute talent shortages across all industries made this strategy unsustainable. Now companies are swinging back toward internal training and talent development.
Building internal talent pipelines requires commitment. It means investing in training programs, creating career paths for supply chain professionals, and making supply chain management an attractive career option. It requires patience as internal talent develops rather than expecting immediate results from external hiring.
International companies face additional complexity in talent strategy. Different regions have varying talent availability, compensation expectations, and skill levels. A global supply chain management operation needs coordinated talent strategy across geographies, not fragmented local approaches.
CEOs must treat supply chain talent as a strategic resource requiring long-term investment. The companies that build strong internal talent pipelines over the next five years will have significant advantages over competitors still scrambling to hire externally.
Inventory Strategy: The Pendulum Swings
During COVID-19, companies dramatically increased inventory buffers to manage disruptions. Fifty-nine percent relied on bigger safety stocks. That number has dropped to 34% as companies unwind short-term pandemic measures.
Future inventory strategies split evenly among surveyed companies. Forty-seven percent plan to maintain current levels with some changes in assortment or location. Forty-six percent expect to reduce inventories to pre-pandemic levels or below. Only 7% plan further increases.
This normalization makes sense from cash flow and capacity perspectives, but it potentially leaves companies vulnerable to future disruptions. The question isn’t whether to hold more or less inventory but where to position inventory strategically and how to manage it dynamically.
Modern inventory management in supply chain systems uses AI and advanced analytics to optimize stock levels based on real-time risk assessments, demand forecasts, and logistics conditions. This beats static safety stock rules or simplistic inventory reduction targets.
CEOs should ensure inventory strategies reflect actual risk assessments rather than following pendulum swings between excess inventory and lean optimization. The right inventory level depends on your specific supply chain vulnerabilities, not industry averages.
What CEOs Must Do
Effective supply chain management at the CEO level means asking the right questions and demanding honest answers. Here’s what to focus on:
Governance and Visibility Can you confidently state that your board understands major supply chain risks? Do you have formal processes for regular board-level discussion of supply chain issues? Can your team identify tier-two and tier-three suppliers for critical components?
Resilience and Response What’s your average time to recovery from supply chain disruptions? If it’s more than one week, why? Do you have effective early-warning systems for both internal and external risks? Have dual-sourcing and regionalization initiatives actually progressed or just been maintained on paper?
Technology and Talent Does your supply planning use AI to evaluate risk scenarios quantitatively? Do you have a clear plan to build or acquire the digital talent your supply chain needs? Are digitization projects delivering quantified business value or consuming resources without results?
Compliance and Investment Are you compliant with new supply chain regulations, particularly around environmental and human rights standards? Is your board willing to budget for supply chain risk mitigation, not just respond to crises after they occur?
The International Dimension
Global supply chain management requires understanding regional variations in risk, capability, and opportunity. Asian manufacturing remains dominant but faces rising labor costs and geopolitical tensions. European supply chains grapple with strict regulations and energy costs. Latin American and African suppliers offer growth opportunities but often lack infrastructure and supplier networks.
The trend toward regionalization doesn’t mean abandoning global supply chains entirely. It means creating more flexible networks that can shift between global and regional sourcing based on conditions. This requires maintaining relationships with suppliers across multiple regions rather than consolidating into single regions.
Currency fluctuations, trade policies, and geopolitical tensions affect global supply chain management in ways that demand CEO attention. These aren’t operational details – they’re strategic factors that determine whether your supply chain management delivers competitive advantage or creates vulnerability.
Moving Forward
Supply chain management has become a CEO-level responsibility because supply chain decisions affect every aspect of business performance. Companies with resilient, efficient supply chains gain competitive advantages through better service, lower costs, and faster response to market changes. Companies with weak supply chain management face constant firefighting, higher costs, and customer dissatisfaction.
The work requires sustained attention and investment. Quick fixes and reactive responses won’t build the visibility, resilience, and capabilities needed for effective supply chain management. The companies investing in these capabilities now will separate from competitors still treating supply chains as back-office functions.
As CEO, your role isn’t to manage daily supply chain operations. It’s to ensure your organization takes supply chain management seriously at all levels, allocates sufficient resources to critical initiatives, and maintains focus on building long-term capabilities rather than just responding to immediate crises. The questions in this guide provide a starting point for ensuring your company treats supply chain management with the strategic importance it deserves.
Sources:
- McKinsey: Supply chains remain vulnerable, 90% of companies experienced disruptions in 2025
- McKinsey: Only 30% of boards have deep understanding of supply chain risks
- McKinsey: 73% report progress on dual-sourcing, 60% on regionalization
- McKinsey: 90% of companies lack sufficient digital talent for supply chain goals
- McKinsey: Only 9% compliant with EU Corporate Sustainability Due Diligence Directive
