In 2020, supply chain organizations are expected to add value to the enterprise, not only by reducing costs, but also by supporting enterprise-wide objectives such as growth strategies, customer-centricity and digital transformation.
As digital capabilities and other supporting technologies become mainstream, the digital supply chain is assuming a much bigger role in driving enterprise-wide efforts.
While cost is still king, 2020’s supply-chain objectives reflect this change as the focus incorporates value-added initiatives targeting automation, analytical abilities and risk management.
This change must be managed carefully.
Our 2020 Key Issues Study findings confirm that the mantra of “doing more with less” is still prevalent, but the top concern of supply chain leadership is that their organizations are in fact overcommitted.
What the enterprise needs from supply chain
By a wide margin, the number-one “ask” of supply chain is supporting enterprise cost-efficiency improvement, followed by supporting enterprise growth strategies and customer-centricity.
Creating sustainable cost efficiency that supports investment in profitable growth has become a primary strategy for companies seeking to gain a competitive advantage.
The challenge is to avoid the boomerang effect, i.e., when companies see their cost-reduction efforts pay off in the short term, only to have costs creep back up after a few years. The key is using the right approach for attaining sustainable savings.
Traditional approaches to performance improvement can miss linkages between the business and operating models, resulting in mismatched structures or unsustainable savings. In contrast, our approach, termed sustainable enterprise cost optimization (SECO) allows cost reduction efforts to be viewed as part of an overarching business transformation, including reinvestment in core capabilities supporting the business strategy.
Download The Digital Supply Chain’s Evolving Role in the Enterprise Agenda to understand what steps to take next in the value-delivery evolution, and why supply chain leaders should look to enterprise business objectives and expectations to determine where to focus.