CIOs Managing the Supply Chain

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One thing he learned was that the logistics operation was in shambles. Every year Levitz spent $450 million on goods but spread it out to more than 200 suppliers. As a result, the furniture company was not able to gain any economies of scale. Furthermore, the logistics managers were still using spreadsheets to coordinate the transportation of goods from the suppliers to the approximately 150 stores. In some cases, Levitz would have to pay for an entire truck to transport only one or two couches. Mazzoni put two of his top business analysts in charge of redesigning the logistics processes. Between 1997 and 1999, Levitz opened two central distribution hubs in California and North Carolina and required suppliers to ship all finished goods to those hubs. From that point on, Levitz was able to ship full truckloads of goods to their retail stores.

Mazzoni’s efforts, however, were too little and too late. In 1997, the Boca Raton, Fla.-based furniture giant declared bankruptcy. The ERP project was killed in 1999, even though it was 70 percent complete. And Mazzoni himself left the company in June 2001 after it was sold to the Levitz Home Furnishing Holding Corp.

But without his seniority and experience in other parts of the business, he says, he wouldn’t have had the credibility necessary to even attempt the job. "Taking over logistics was a natural step," says Mazzoni, "but it wouldn’t have been natural without me."

Wilsons’ Orton, who has a strictly IT background, is uncomfortable with the notion that giving the CIO command of the supply chain should come down to the strengths of any one individual. "The deal is that [the company] recognized the business issues," he says. "It is very much a collective effort."

In fact, Earl says company executives often use the dual role to promote the CIO into a greater leadership role in their company. As IT and business processes become more and more interwoven, he says, top executives recognize that the CIO should be contributing more to business strategy.

The bottom line? Combining the two positions is unorthodox and risky, but companies that have taken that step consider it a risk worth taking.

"Our job, to be successful, requires us to look across and at the bigger scope," says Orton. "I think there are certain departments?logistics and systems being one of them?where you actually get a better result if you can see across them."

Copyright © 2002 IDG Communications, Inc.

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