Given the fact that half of a company's costs lie in the supply chain or cost of goods sold (COGS), optimizing supply chain costs is often a major focus. Companies can achieve three to four percent in category reductions year after year, yet, most never make a sustainable bottom-line impact on COGS that fosters true competitive agility.
ZBSC approaches can drive 5 to 10% rapid COGS savings and a COGS to revenue ratio of up to 600 to 800 basis points over time.
Leading companies are breaking this cycle with ZBSC (zero-based supply chain) as a part of ZBx (zero-based mindset)—a holistic way to drive profitability that emphasizes the future over the past. ZBSC helps companies capture sustainable supply chain value in a rapidly changing world.
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 funneled 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.
Only 33% of operations executives see their cost intervention initiatives as durable.
Just 18% of operations executives think leadership has the right initiatives for cost-reduction targets.
Break out of the supply chain death spiral
Create true visibility
Leverage financial and operational data to achieve true visibility and thus, 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 down through the organization.