Jeremy Kay

Extending payment terms is an effective way for companies to generate and preserve working capital and cash flow. By taking a pragmatic approach, CFOs can enable their company’s procurement teams to make informed tradeoffs that optimize both cash flow and earnings.

A procurement partnership may take years to bear fruit, if it succeeds at all. But companies that approach the task with patience and perseverance can reap major benefits.

Because of the complex interdependencies involved, a procurement partnership can take years to develop significant, money-saving synergies.

Procurement partnerships often fail as a result of misaligned—or even competing—objectives, incompatible cultures, and insufficient planning or resourcing.

When… Show more

A procurement partnership may take years to bear fruit, if it succeeds at all. But companies that approach the task with patience and perseverance can reap major benefits.

Because of the complex interdependencies involved, a procurement partnership can take years to develop significant, money-saving synergies.

Procurement partnerships often fail as a result of misaligned—or even competing—objectives, incompatible cultures, and insufficient planning or resourcing.

When procurement partners have compatible goals and the steady attention and support of senior leaders, however, organizations can achieve cost savings of 10% or more on in-scope procurement expenditures due to greater purchasing power, economies of scale, and synergies such as shared best practices and the ability to standardize components. Show less

Automotive companies need new methods to anticipate risks across the supplier spectrum and secure critical parts, commodities, and materials.

To react fast to disruptions, companies need to enhance their monitoring, predictive modeling, and crisis management capabilities.

To structure operations for resilience, they need to focus on network design, sourcing strategy, planning, and flexibility.

In a BCG survey, automotive companies reported low maturity with respect to these… Show more

Automotive companies need new methods to anticipate risks across the supplier spectrum and secure critical parts, commodities, and materials.

To react fast to disruptions, companies need to enhance their monitoring, predictive modeling, and crisis management capabilities.

To structure operations for resilience, they need to focus on network design, sourcing strategy, planning, and flexibility.

In a BCG survey, automotive companies reported low maturity with respect to these capabilities. They also reported prioritizing near-term crisis response over longer-term resilience. To gear up for future crises, companies must develop a roadmap for resilience and rewire their organizations for risk management. Show less

Supply chain professionals have always valued resilience. During the recent decades of relative stability, however, the business case for prioritizing resilience investments over cost reduction was unclear. As a result, companies have often responded to disruptions with short-term solutions such as building inventory. They seldom made long-term structural changes to their supply chains, such as nearshoring or building more capacity, at least partly because such moves often cannot address… Show more

Supply chain professionals have always valued resilience. During the recent decades of relative stability, however, the business case for prioritizing resilience investments over cost reduction was unclear. As a result, companies have often responded to disruptions with short-term solutions such as building inventory. They seldom made long-term structural changes to their supply chains, such as nearshoring or building more capacity, at least partly because such moves often cannot address immediate disruptions and have an unclear return on investment (ROI).

Today, with the risk of a downturn looming, companies are under pressure to cut costs and improve working capital by reducing inventory; however, supply chain leaders should not abandon their efforts to promote resilience. Given the impacts of climate change and geopolitical instability, we believe that frequent and unpredictable supply chain disruptions are the ‘new normal’. The challenge now is to increase resilience while also delivering on cost, working capital and service-level commitments and targets.

This paper explores the capabilities required to absorb and recover from disruptions and discusses the status of implementation as revealed in a resilience capabilities benchmarking study conducted by Boston Consulting Group and APQC. It also offers guidance on how companies can develop a resilience strategy tailored to their risk profile. Show less

Jeremy Kay, a BCG managing director and partner, talked with us about North American companies’ challenges in building operational resilience.

When an unpredicted disruption occurs, a resilient supply chain can respond quickly to ensure operations recover and return to business as usual. The faster companies can react in a crisis, the more likely they are to secure a first-mover advantage in acquiring scarce materials or capacity.