With the concerns of the cost of the focus, executive attention to the risk of the supply chain has decreased. To repeat C-Suite leaders, the supply chain must align their efforts with broader business goals-and support them with measurements that matter.
aging
Leaders in the supply chain may feel the sense of whiplash. During the pandemic, supply chains have increased from the cost centers in strategic vital business functions. The durability, flexibility and flexibility became top priorities – even when they came at a higher cost.
But the pendulum turns back. In a survey at the end of 2024 by Global Consultancy Ey88% of supply chain leaders said the C-SUite once again examined the supply chain as a cost center. Seventy -eight percent reported a refreshed focus on cost management. A similar survey by Giant KPMG professional services resonates this trend: “When executives face a trade between agility and cost, it is a cost that it wins,” the report concluded.
This shift is not because the world has become more stable. Invoices are increasing and global disorders remain a steady threat. But inflation – and perhaps a little complacency – has pushed companies to return to the hierarchy of costs in the supply chain discussions.
“I don’t think any company is removed from durability,” says Michel Roger, chief executive of the supply chain and businesses at the Sap Business Group at Accenture. “It’s just that they are more careful for its cost. It may be not durable at all costs, but durability at reasonable cost.”
This leaves the discussion of the durability-suspicion somewhere in the messy waist. One can override the other according to the moment – but both remain in mind for the leaders of the supply chain.
So how can leaders hit the right balance? In talks with experts, we have identified four key leaders of the supply chain chain can use – along with practical tips for implementing them.
Lever 1: Speak the language of C-SUIT
With the concerns of the cost of the focus, executive attention to the risk of the supply chain has decreased. To repeat C-Suite leaders, the supply chain must align their efforts with broader business goals-and support them with measurements that matter.
Instead of focusing exclusively on operational measurements such as cash circles, leaders should connect their KPIs with strategic results, such as increased revenue, improved customer satisfaction and increase the market share.
This also means the split of silo. According to EY, 97% of supply chain leaders face challenges with poor integration measurements in all functions. A better supplier can improve customer satisfaction – but without common data from marketing and supplies, supply chain teams may never know.
Lever 2: Use Geography to your advantage
The relocation of supply chains closer to the final markets can reduce delivery times, skirt invoices and increase the response. But the decision -making calculus has shifted. Labor, production and transport costs have changed significantly in recent years.
“The original model of global supply was built with low labor costs in Asia and manageable transport costs,” says Mary Rollman, head and leader of the US supply chain in KPMG. “But labor costs are increasing in Asia and the cost of transport has become volatile.”
Today, companies need to weigh new dangers-such as geopolitical tensions that threaten shipping strips-and the model overall cost scenarios to serve all areas. “You need a clear picture of the actual cost of serving each market from different parts of the world,” Rollman says.
Lever 3: Regulatory and Tax Arbitration Factor
Tax laws and regulations also play an important role in the supply chain strategy – but their navigation is increasingly complex.
“You really have to get down to what you build, where your raw materials come from and what laws and invoices apply,” he says Dug ZouvicTax partner in KPMG.
The ability to adapt quickly to regulatory shifts is now necessary. When invoices were imported for Chinese imports during Trump’s first administration, many companies revolved in production in Mexico. Now, the new invoices are aimed at Mexico and Canada.
A Covid era strategy still offers value: maintaining a regional subcontractor network. “If Colombia is suddenly hit with invoices, having established relationships elsewhere in Latin America can help you rotate quickly,” Roger says.
LEA 4: Integration of isolated Technological Initiatives
Despite large investment in supply chain technology, many organizations have not seen promising productivity profits.
The problem? Lack of integration.
“You may have 15 different applications that support your supply chain, but many of the data are stuck in silo,” says Takshay Aggarwal, leader of America’s supply chain development.
Operating managers also tend to optimize their own goals. A logistics administrator, for example, can choose the cheapest method of shipping without examining the wider business impact of the slowest delivery times.
What is needed is a consolidated system that unifies the data and provides an end to end projection. This allows companies to evaluate the agreements and optimize durability, costs and performance in a more holistic way.
Hitting the balance of agility-dumb
In today’s uncertain economy, maintaining costs under control is essential. But durability still matters – and so is the ability to respond faster than competition.
“It’s not just about reducing the cost of the supply chain,” Roger says. “It’s about how fast you can react – and react faster than others. This is a competitive advantage.”
This story also appears in Sap.com.
