Bain: CEOs Leveraging Supply Chain for Competitive Edge

A report released by Bain & Company shows that, for supply chain professionals, cost control has been supplanted as a top priority by resilience, digital enablement and sustainability.

The global management consultancy firm’s study reveals that today’s supply chains demand more complex trade-offs across a growing set of priorities, including resilience, sustainability and responsiveness to customers.

As a result, says Bain, supply chain reinvention is now a CEO-level concern, and is seen as an opportunity to create unique selling points.

The report’s lead author is Hernan Saenz, Global Head, Performance Improvement Practice at Bain.

Its headline findings include:

• Supply chains now demand more complex trade-offs across a growing set of priorities, including resilience, sustainability, and responsiveness to customers.
• Because of this supply chain reinvention has become a CEO-level  concern
• Leading companies employ integrated decision-making, guided by an understanding of their supply chain’s unique qualities.
• Companies that get the trade-offs right outperform strategically and set new standards of operational excellence.

“It took fewer than four years of massive global turbulence to upend decades of business dogma about how to design and operate a winning supply chain,” says Saenz. “Now, the question CEOs must answer is no longer ‘Should we reinvent our supply chain?’ but rather, ‘How should we reinvent our supply chain?’”

Bain: Supply chains need to be highly responsive

The report says that although traditional priorities of reducing costs, optimising inventory, improving service and quality, and driving growth remain “fundamental”, supply chains must “also become more resilient, sustainable, and highly responsive to changing customer expectations”.

It adds companies that get supply chain trade-offs right will not only “find breakthrough business opportunities” but will also be able to “deploy capital toward bigger and bolder moves”. 

New-look supply chains, the report continues, have:

• More built-in flexibility
• Contain a balance between offshore manufacturing and manufacturing closer to customers and suppliers. 
• Possess greater visibility, thanks to better data, digital tools, and relationships with suppliers and partners. 
• More circularity, as leaders address resource extraction, wasted materials, and resource scarcities. 

“Leaders are making their supply chains less linear by implementing models that recycle, remanufacture, repair, and repurpose materials and equipment," the report says.

Bain adds that progressive business leaders “are guided by a shared understanding of how they want to differentiate their respective supply chains”. 

Bain urges leaders to: Take a holistic view to redesign the whole system; assign a cross-functional team to find end-to-end solutions; build the operations team’s skills in strategy and cross-disciplinary collaboration; and work more closely with suppliers, customers, and other partners. 

“Leadership teams can position their companies for success and market share gains by anchoring actions in a well-defined strategy to differentiate their supply chain,” the report concludes. “That will help them manage competing trade-offs at each fork in the road of their supply chain reinvention journey.”

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