With half of companies’ costs in the supply chain or cost of goods and services (COGS), reducing supply chain costs is a major focus. 3-4 percent: Yet companies are not realizing cost savings for competitive agility. They eke out three to four percent in category reductions year after year. But most never make a sustainable bottom line impact on COGS.
Leading companies are breaking this cycle with ZBSC (zero-based supply chain)—part of ZBx (zero-based mindset), a way to drive profitability that emphasizes the future over the past. ZBSC can help companies capture supply chain value in a rapidly changing world.READ THE REPORT [PDF]
ZBSC requires a mindset shift across the organization:
HITTING A WALL. It is not that supply chain executives have turned a blind eye to systemic supply chain issues. Companies are doing cost optimization across the supply chain. But most are not getting sustainable results.
DYNAMIC, NOT DEAD END. By applying ZBSC, companies no longer push for the next percent of hoped-for savings. They embed a new way of working that constantly enables new ideas about where and how to capture value that can be funnelled back to growth.
NO STANDING STILL. Continuous renewal makes ZBSC different from traditional supply chain cost optimization. Whereas old methods rely on cost targets based on yesterday’s realities, ZBSC is a sustainable reset of a company’s cost baseline.
Organizations can break out of the supply chain cost reduction death spiral:
Create true visibility
Leverage financial and operational data to achieve true visibility at a granular level to understand the current state against internal and external practices.
Focus on the intersections
Identify and target opportunities at intersections of the business where best practices and emerging trends are often hidden.
Stretch past incremental
Embrace technology, analytics and sustainability opportunities to set zero quartile goals and future-proof the supply chain.
Embed a change mentality
Drive support from the top all the way through the organization.