Title five-levers-for-optimizing-supply-chain-costs.pdf ✅

Gartner for Supply Chain 5 Levers for Optimizing Supply Chain Costs
1 © 2022 Gartner, Inc. and/or its affiliates. All rights reserved. CM_GBS_1797200 Follow Us on LinkedIn | Sign Up for Our Newsletter | Become a Client Supply chain cost management models remain short-term and functionally focused. Short-term cost goals are prioritized over long-term business value, and a narrow, function-specific focus limits the ability to pursue big change and meet full performance potential. Reducing supply chain costs is further complicated by supplier substitution, outsourcing, supplier refinancing and inventory changes. Short-term cost goals prioritized over long-term business value Functional focus limits ability to pursue big change Cost-cutting “fatigue” Managers protecting individuals and/or parts of the organization Unclear measures of success Poor financial transparency across the enterprise 34% 23% 1st choice 2nd Sum 57% 42% 30% 25% 20% 17% 18% 16% 10% 13% 12% 25% 14% 14% 7% 5% n = 203 Base: All respondents Note: Percentages may not add up to 100% because of rounding. Source: Fall 2018 Agenda Poll Supply Chain Leaders Q. Please select up to two of your most pressing problems for: Driving cost optimization across the enterprise. Cost management remains short-term and functionally focused Percentage of respondents
2 © 2022 Gartner, Inc. and/or its affiliates. All rights reserved. CM_GBS_1797200 Follow Us on LinkedIn | Sign Up for Our Newsletter | Become a Client Not only do the best supply chain leaders control supply chain costs in the face of disruptions like pandemics, recessions and geopolitical shifts, but they also consider the relationship between diverse resources and networks. Instead of reduction targets, these supply chain leaders and their key stakeholders focus on aligning and collaborating around key operating outcomes to optimize supply chain costs. To optimize supply chain costs, it’s important to align business value (customer experience, profitable growth, compliance and sustainability) with efficient supply chain operating outcomes (demand fulfillment, product supply and new products/business). Efficient operation outcomes Individual cost center control Cost management continuum E2E cost optimization • High rigor • Isolated analysis • Static assumptions • Strategically aligned • Measurable and discrete • Repeatable and sustainable • Highly ambitious • Complex modeling • Limited actionability Source: Gartner Align stakeholders on efficient operation outcomes Source: Gartner Optimize operating outcomes to support strategic value imperatives Source: Gartner Strategic imperatives Operating outcomes Efficient demand fulfillment Cost-optimized product supply Risk-optimized new business/products Integrated solutions for joint value creation Customer experience strategies Profitable growth with superior return on investment Responsible use and protection of resources
3 © 2022 Gartner, Inc. and/or its affiliates. All rights reserved. CM_GBS_1797200 Follow Us on LinkedIn | Sign Up for Our Newsletter | Become a Client Supply chain leaders must adjust how they engage with their key stakeholders and propose initiatives that achieve breakthrough cost improvements. Ground supply chain cost performance in the following framework, which identifies five levers to manage in pursuit of end-to-end cost optimization. Operationalize the framework by taking the following three actions: 1. Drive collaboration and innovation around cost-optimized operating outcomes. 2. Develop cost analysis models that align to the scope and performance objectives of specific operating outcomes. 3. Justify investments based on their potential to improve specific operating outcomes. Five levers for supply chain cost optimization Source: Gartner 5. Portfolios Align product and service offerings with customer value and market competition Align suppy and distribution network to product and service demand Design and enable processes and roles for efficient network operation Adjust tactics for optimal supply-demand balance Minimize pricing waste 4. Networks 3. Processes and roles 2. Operating tactics 1. Deals