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Supply Chain Graphic of the Week: Simple Formula for Supply Chain Cost Optimization


Cash Flow, Network Redesign, and Growth-Focused Investments


Nov. 5,  2020

At the virtual Gartner Supply Chain Executive Forum this Week, originally scheduled for the first time in Orlando from its normal venue of Scottsdale, AZ, analyst Paul Lord led a session on "supply chain cost optimization."


As part of that, Lord presented what he called a simple formula for companies to adopt, as seen in the graphic below:



In the end, it is pretty simple:


In the short term, focus on steps that will improve operating cash flow, such as actions to reduce inventory and distribution costs.


In the mid-term, look at opportunities to reconfigure the supply chain network, to match with larger strategies and find new cost savings.


In the longer term, focus new supply chain investments in areas that will drive growth.


A good framework - but we wish it was that easy.


Any reaction to our Supply Chain Graphic of the Week? Let us know your thoughts at the Feedback button below.


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