Supply Chain Trends: #3 Sustainability and Resilience Top Cost Concerns


This is an excerpt of the report “The Future of Supply Chain Management 2021–2025: Balancing Sustainability, Resilience and Cost”, focusing on the topic above. For the Executive Summary of the report, please, refer to the second part of this post.


CAPS Research, BCG
Bryan Fuller, Geoff Zwemke, Daniel Weise, Alex Dolya, Chitt Jha
May 2022


Sustainability and Resilience Top Cost Concerns

Lowering costs and improving margins have always been key goals for supply chain managers.

But while they remain important, this year’s survey shows they have been displaced in the hierarchy of concerns by environmental sustainability and resilience considerations (Figure 4).


Figure 4: The comparative importance of sustainability, resilience, and cost efficiency factors in supply chain operations



These responses are consistent with feedback from BCG’s recent engagements with supply chain executives.

As inflation pushes up prices for both raw materials and labor, executives say they would like to contain these cost increases to the extent that they can, but they are more focused on sustainability and resilience than they are on seeking further cost reductions.


As inflation pushes up prices for both raw materials and labor, executives say they would like to contain these cost increases to the extent that they can, but they are more focused on sustainability and resilience than they are on seeking further cost reductions.




EXECUTIVE SUMMARY


The Future of Supply Chain Management 2021–2025: Balancing Sustainability, Resilience and Cost [Executive Summary]


CAPS Research, BCG
Bryan Fuller, Geoff Zwemke, Daniel Weise, Alex Dolya, Chitt Jha
May 2022


The Future of Supply Chain Management

Every five years, the Center for Advanced Procurement Strategy (CAPS), a joint initiative of the Institute for Supply Management (ISM) and Arizona State University, conducts a global survey of practicing supply chain executives and knowledge experts, asking about the challenges they expect to face and their strategies and performance goals in the coming years.

For the 2021 survey, CAPS worked with BCG to query 157 supply management leaders across industry segments, including discrete manufacturing, process manufacturing, and service industries.


We gained their insights on a host of important topics, including:

  • Supply chain market dynamics
  • Cost savings and efficiency
  • Risk and resilience
  • Environmental, social, and governance (ESG) regulations and initiatives
  • Supplier management
  • Supply chain operations
  • Human resources
  • Technology

Key Insights from Procurement and Supply Chain Leaders

First, fulfilling environmental, social, and corporate governance (ESG) goals has assumed paramount importance.

The second notable trend is a greater emphasis on achieving resilience in the face of unpredictable raw materials shortages and logistical challenges, which were greatly exacerbated by the pandemic.


Two trends in the new survey stand out: (1) fulfilling environmental, social, and corporate governance (ESG) goals ; (2) … a greater emphasis on achieving resilience


The schematic below summarizes some of the survey’s most important findings.

Summary Figure: Highlights from the 2021–2025 CAPS and BCG global survey of procurement leaders


ZOOM VIEW

Value delivery

  • Increasing environmental regulations and sustainability concerns will be the most important disruptive factors in SCM over the next 5 years (83%).
  • Reducing costs will be important to future operations (80%).
  • Strengthening supply chain resilience will be a critical priority (88%).


Operating model

  • Need to transform to a future- ready operating model (80%).
  • Need to build transparency throughout the supply chain (84%).
  • Need to develop a strategy for ensuring business continuity (89%).


Digital

  • Expect to accelerate adoption of digital and analytics capabilities (87%).
  • Need to create a common, org-wide database for supply information (78%).
  • Need to integrate ERP applications (72%).

“Going forward, CPOs will need to constantly balance tradeoffs between sustainability, resilience and cost.

CPO KPIs and capabilities will need to evolve respectively to reflect all these priorities. This will be the most challenging task for the next five years,” — Alex Dolya


CPOs need also to rethink through their approach to suppliers, given their need to balance priorities.

If in the past, cost savings were primary objective of supplier engagement, today CPOs need to ensure that suppliers can deliver in the face of decarbonization, supply resilience and cost competitiveness.

Getting the equation right could prove tricky.


CPOs need also to rethink through their approach to suppliers, given their need to balance priorities. Getting the equation right could prove tricky.


Structure of the report

· The Future of Supply Chain Management

· Key Insights from Procurement and Supply Chain Leaders

· The Rising Importance of Sustainability

· The Need to Improve Supply Chain Resilience

· Sustainability and Resilience Top Cost Concerns

· 2021 vs. 2016: Different Change Drivers, Different Strategies

· Upgrading Supply Chain Technology

· Looking Forward


Report Authors

Bryan Fuller
Senior Director, Procurement, Solidigm, Former Executive Director, CAPS Research

Geoff Zwemke
Director of Product, CAPS Research

Daniel Weise
Managing Director and Partner, BCG, Global Leader for BCG Procurement Practice, CEO of Inverto

Alex Dolya
Managing Director and Partner, BCG, Asia Pacific Leader for BCG Procurement Practice, Global Leader for Procurement and SCM in Energy and Mining, BCG

Chitt Jha
Partner and Associate Director, BCG, BCG Global Expert on Procurement Resilience, Sustainability, and Digital


Originally published at CAPS Research.


Total
0
Shares
Deixe um comentário

O seu endereço de e-mail não será publicado. Campos obrigatórios são marcados com *

Related Posts

Subscribe

PortugueseSpanishEnglish
Total
0
Share