CIOs Stress Supply Chains, Efficiency as Recession Risks Rise

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Tech leaders at Walgreens, Carhartt and other companies say they are monitoring markets, inflation and supply-chain uncertainties

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“During times of economic uncertainty, companies look for ways where technology can drive growth and create more economic value faster,” said Juan Perez, chief information officer at Salesforce Inc.

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“When budgets are under significant scrutiny, companies tend to place more emphasis on shorter-term solutions that can drive efficiency and productivity,” said Mr. Perez, who spent 32 years at United Parcel Service Inc.,

including six years as CIO.

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Those solutions can run the gamut from simply planning further ahead to the use of automation and artificial intelligence to minimize supply-chain bottlenecks that drag on profits, CIOs said.

Across the tech sector, from startup founders to public- and private-market investors and corporate executives, a new mentality is emerging in which productivity and profitability play a bigger role.

“The North Star metric for many companies has been growth. In just several weeks, there is a focus back on fundamentals like gross margins and positive contribution margins,” said Michael Burns, co-founder and executive chairman of iDeal Semiconductor Devices Inc. in Bethlehem, Pa.

The magnitude of widespread supply-chain backlogs hit home this month when he ordered a $5 million piece of semiconductor equipment with an estimated delivery time of about 18 months, longer than what is typical. Confronted with the risk that profits will become harder to achieve in a weakening economy, companies need to focus on minimizing costly delays, according to Mr. Burns, also a partner with private-equity and venture-capital investor Murray Hill Group in New York.

Therefore, he said, technology and services that make the supply chain more efficient are increasingly important.

For some CIOs, managing backlogs involves placing orders well ahead of time. At pharmacy giant Walgreens Boots Alliance, delivery times for items such as workstations and PIN pads for stores has in some cases doubled to 16 weeks from eight, according to CIO Francesco Tinto. That’s putting more pressure on the business to plan farther in advance, he said.

Since Carhartt CIO Katrina Agusti stepped into the role two months ago, driving efficiency through better management of the supply chain has been a top priority.

“There is potential supply-chain risk, should the economy worsen,” she said. The company is investing in technology that will help it cope, she said.

The Dearborn, Mich.-based company aims to achieve better end-to-end supply-chain visibility, said Ms. Agusti. She aims to improve the way the company monitors exceptional situations and enhance its ability to redirect or expedite supply more proactively, she said. To meet that goal, Carhartt is working with transportation and warehousing company Manhattan Associates,

Carhartt also is integrating supply-chain data from third-party logistics providers into its systems, she said.

Long term, the company’s nascent data-science team will help build predictive models that anticipate supply-chain issues and model and evaluate mitigation options, said Ms. Agusti.

Should the economy worsen, she said, “these investments will help.”

Write to Isabelle Bousquette at [email protected]


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