One of the great findings of Gartner’s 2023 State of Healthcare Provider Supply Chain: Organizational Structure research is that the title of most senior supply chain leader is elevating. Specifically, compared with Gartner’s 2019 (pre-pandemic) study, 33% of the leaders are now chief supply chain officers (CSCOs) as opposed to 24% just four years ago. At the other end of the spectrum, the top leader with a title of director is almost eliminated at only 3% of the role versus 11% in 2019. Progress.
But the real message is that having a CSCO leading supply chain brings lot of positives. How organizations get there is a different question. Does the leader make the case? (Yes, sometimes) Or does the organization recognize the need and elevate the title? (Yes, sometimes). The path matters less than the outcome. Organizations who elevate the title to CSCO see three powerful correlations: role transition, strategy development and ESG maturity.
One of the biggest challenges in healthcare provider supply chains is retention of the leader. Leader retention is a predictor of next level team member tenure as well. Elevating the lead role to CSCO usually means elevation of the direct reports to vice president from director. It also creates compensation and career path development that I see as positive in almost every organization where it occurs. The above figure shows two big conclusions. One is that nearly half (48%) of supply chain leaders at healthcare providers we surveyed have been in their roles for fewer than three years. The other is that only 29% are in their role for seven years. This is a massive issue. From our supply chain benchmarking study, we know that 36% of the cost of delivering care is tied to supply chain. We also know that the impact on service and patient outcomes is high as well. Leaving this role to turn over as it does is an industrywide challenge.
Of supply chain leaders surveyed, 56% without a CSCO title held their post for less than three years, compared to 32% who were CSCOs. Likewise, health systems are almost twice as likely to have kept their supply chain leaders for more than seven years if their title is CSCO. These are significant differences in a high impact role. Anecdotally, we also know that succession planning is lacking at many less mature health systems for supply chain leaders and that these roles can be open for six to 18 months when they go vacant.
Also, these CSCOs are more likely to having a long term strategy in place and less likely to have no strategy or a one-year plan than non-CSCOs.(Figure 2). Our Healthcare Supply Chain Top 25 study shows that organizations flourish when they consistently and proficiently build long-term supply chain strategies aligned to the health system strategy. Our data shows a strong correlation to expanded horizon strategy development on every measure.
The elevation of the role allows for VPs at the function areas of sourcing, logistics, clinical alignment and analytics that either push CSCOs to develop comprehensive strategies or give them the time to devote to planning. Either way it is a win for the organization.
Lastly, the role of ESG for healthcare supply chain is accelerating. Health systems are among the largest employers in many markets and supply chains play integral roles in delivering on ESG goals for organizations. ESG maturity is positively correlated in every specific use case across supplier diversity, economic opportunity, community development, environmental sustainability and social determinants of health. This area is growing in importance for supply chains. We are reflecting it in our Top 25 ranking and many CEOs are aligning to the ESG Imperative. Supply chains lag here at their detriment and CSCOs are ahead of the pack.
The bottom line is that title matters. If you are a CSCO, awesome. If not, consider making the case to elevate your title in the organization. I hope CSCOs comprise 50% of the top leadership roles by 2030. Healthcare supply chain will be better for it.
Gartner Supply Chain
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