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ID Challenge Report: Cost Optimisation for complex supply chains

Cost optimisation is an ongoing business function, helping organisations to manage spending and planning, while also maximising value and profit. 

From getting the best possible pricing from suppliers to having an in-depth understanding of your operations, you need to have clear visibility over your entire organisation in order to be most effective – and most profitable.

For businesses with complex supply chains, cost optimisation is a critical finance operation. A Gartner report on supply chain cost optimisation strategies found that 57% of the models businesses use to manage their supply chain costs are focused on the short term. This means that often, short-term goals are prioritised over long-term strategy – reducing the opportunity to make significant changes or to be able to respond quickly to changing market and supply fluctuations.

Bringing supply chains into focus

The pandemic brought our reliance on certain supply chains sharply into focus. And its impact, along with other global economic factors, has shown that supply chains can be more fragile than expected, and business leaders need to have a plan for disruption. And not just for disruption – but for a procurement and supplier strategy that has cost optimisation at its heart.

What are the top considerations for cost optimisation across a complex supply chain?

  1. Have a strategy.
    You will already have a supplier or procurement strategy in place. Does it include cost optimisation? Are your supplier selection and review processes driven by cost optimisation? And if so, does everyone involved in the business understand the drive for cost optimisation and put it at the heart of their decision making?
  1. Understand your supply chain.
    This starts with having access and visibility to accurate data about your supplier relationships – including cash flow, invoicing, delivery, stock levels, currency hedging and more. The more information you have, the better insights you can get, giving you actionable information that helps you to improve your approach.
  1. Embrace risk.
    Why settle for ‘OK’ when ‘game-changing’ is available? A PwC report on strategic cost reduction encourages businesses to be bold, brave and creative. Being brave, it says, “means cutting the costs that have seemed too difficult to tackle, such as property, structural inefficiency and complex legacy operations.”
  1. Let technology help.
    Businesses  – particularly those operating across several regions, or consolidating M&A activity, or with challenging supply chains – can benefit hugely from putting the right technology in place. The right technology can give you actionable business insights. Access to real-time data transforms scenario planning and cost optimisation strategy, putting you in complete control and giving you a competitive edge.

What are you waiting for?

As a CFO or Finance Director, you’re already looking at cost optimisation. It’s a key factor in remaining competitive and profitable. But are you making decisions based on the best possible insights and evidence? Could you be finding new ways to reduce costs across your supply chain – ways that are currently hidden because of a lack of data or knowledge?

We can help with that. We’ve worked with complex businesses to help them find completely new ways to optimise their costs, improve cash flow and even find new income streams. If you’re interested in finding out how book a discovery call with us today.

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