How to Make Your Supply Chain a Growth Engine

Companies should use their supply chain to anticipate customer trends and also adopt a zero-based approach to the function.
Gary HanifanApril 24, 2018

It’s no secret that companies across industries face increasing disruption driven by competitive pressures, emerging technologies, and an ever-expanding range of customer expectations.

Gary Hanifan

These trends will only continue to accelerate. Consumers want products in their hands faster than ever, and they expect a more tailored and personalized experience. As a result of these disrupting factors, for many companies, growth is becoming more difficult to come by.

The supply chain function is not immune to this pressure. In fact, it’s causing corporate leaders to pay more attention than ever to their supply chains and ask them to be growth engines — a trend we’ll be seeing even more of this year.

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So, what does it take for a supply chain to be a growth engine? We see two immediate opportunities supply chains should take:

Use the supply chain to anticipate customer trends and meet expectations. According to Accenture Strategy research, 56% of business leaders believe customer experience is their top digital transformation priority. With customer demands continuing to heighten, just offering a product or service is no longer enough. Successful companies need to be focused on delivering the most compelling experiences.

Hyper-personalization is king. Companies need to offer highly individualized, focused products and completely customized services providing buy-anywhere, collect-anywhere, return-anywhere capabilities via flexible channels. With a strong focus on business-model and technological innovation, hand in hand with the use of analytics and other digital technologies, companies have an opportunity to spot trends among customers and stay in front of demand.

The supply chain is a key area within a company to mine this insight. It contains data that helps companies understand the way technologies are changing the way people live and work and redefining customer expectations.

Having that information can allow companies to get to the root of why customers buy, and respond accordingly with new products, services, and experiences to meet that demand.

The companies that are successfully managing risk and disruption are those that are in tune with the end consumer. Even companies that are several degrees of separation from the consumer need to be fully aware of how end-consumer trends impact their operations. It’s no longer a nice-to-have; it’s a need-to-have to survive.

Put non-working money in the supply chain to work toward funding growth. With half of companies’ costs typically residing in the supply chain or costs of goods and services (COGS), the supply chain can be a source of funds that can be reallocated to growth initiatives.

However, the process of uncovering that non-working money can be overwhelming. Many organizations work in functional and geographic silos that make it seem impossible to know who is spending what, where — and, importantly, why. The good news?  It’s not as difficult as they think.

Companies need to look beyond traditional supply chain cost optimization to a more holistic approach — something we call zero-based supply chain (ZBSC).

ZBSC is part of what we call ZBx, or having a zero-based mindset. Whereas old methods rely on cost targets based on yesterday’s realities, ZBSC is a sustainable reset of a company’s cost baseline. It accounts for change, including improvements of top performers and technology, to determine “should costs” and develops a path to realize them.

This year, companies need to be applying digital technologies and sustainability practices that optimize price and performance across global operations and enable richer data insight and value. The result? ZBSC allows companies to deliver superior supply chain performance at the right cost.

They key to success is to make the effort durable. It can’t be a one-and-done. Continuous renewal makes zero-based supply chain effective. It keeps the non-working money from building up while driving funds to fuel growth and increase competitiveness.

No one is disruption-proof. Technology has made every business vulnerable. The good news is that companies and supply chains can prepare for and manage disruption. By positioning the supply chain to be a growth engine, companies can move from being disrupted to becoming the disruptors themselves this year and beyond.

Gary Hanifan is a managing director at Accenture Strategy.

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