Talking Supply Chain: Achieving cost savings through better procurement

A recent survey from Boston Consulting Group found that 65% of executives are prioritizing supply chain and manufacturing costs as the biggest levels for organizations to pull for cost savings. This trumps traditional cost-reduction areas such as labor and nonlabor overhead costs (cited by 52%).

“Lingering uncertainty, the need to reshape operations for the future, and disruptive technologies (such as generative AI) are motivating leaders to put cost management at the top of the to-do list,” the report indicated.

But, while executives may be looking to rein in costs, that doesn’t mean supply chains are facing large-scale cuts to their budgets—or people. In fact, Laura Juliano, managing director and senior partner at Boston Consulting Group, says that strategic cost control is the right approach. And it is being helped with the amount of data that is now flowing into organizations.

“First of all, there was a significant increase in our executives declaring that they have the right information and visibility to make the decisions necessary to manage their costs. It was actually pretty low at the end of 2022, the beginning of 2023. And now over the course of that year, executives start to believe that they have the right information so that they can move forward and make decisions,” Juliano told the Talking Supply Chain podcast.

“Executives are now looking at the areas of cost management as the way to fund versus an extreme and acute need to cut costs for the sake of cost,” she said, noting that procurement and strategic sourcing are major areas to focus on, as well as supply chain visibility.

Listen to more of what Juliano has to say in this week’s episode.