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HUB-Supply Chain Supply Chain Industry Updates

How Retail, Other Sectors Can Better Manage Costs


Never mind the “new normal” or the “next normal.” Instead, it might be best to simply accept that uncertainty is continuous and change is disruptive and to embrace the “never normal.”

That seems to describe the world we’re in right now as COVID-19 accelerates changes in consumer behavior (for example, online retail has grown by more then 60% during the pandemic) and organizations look for ways to improve supply chain reliability and flexibility (even as more than 75 percent of them plan for a COVID-19 return scenario).

In a new report, “Zero-Based Supply Chain — Accelerating COVID-19 Recovery,” Accenture offers advice on how to better manage supply chain costs, particularly in light of the fact that costs of goods sold (COGS) contribute to a significant share of a business’ cost base. In retail, for example, COGS accounts for 73% of costs. In the consumer products industry, the figure is nearly 50%.

“COVID-19 has disrupted [the] end-to-end value chain with challenges every step of the way: sourcing raw material production and logistics, manufacturing during plant shutdowns and social distancing, and delivering amid reduced warehouse operations and transportation restrictions,” the professional services firm observed. “Businesses must not only act now but also plan for future disruptions to protect COGS and margins in the ‘never-normal’ world.”

Accenture offered 3 best practices that can help an organization “outmaneuver uncertainty”:

  • Create greater visibility by capturing data “at an actionable level” to help you make better-informed decisions; connect systems to create full visibility, including suppliers, distributors and end-users; and build an analytics capability that “allows for monitoring through dashboards, scenario planning and predictive analytics.”
  • Improve flexibility and agility by identifying “critical work” in the value chain, exploring talent elasticity, understanding which work requires a person’s physical presence, building partner ecosystems and selectively investing in digital.
  • Strengthen resiliency by understanding your assets, exploring automation opportunities and introducing a “control tower-like capability.”

“This is the moment to reinvent business models and reintegrate the value organizations provide into a new societal landscape,” Accenture noted. “The time to shape a mindset of bold business transformation powered by new approaches to technology and responsible leadership is underway.”