How to capture more Supply Chain value

Continuous performance improvement is about increasing productivity and efficiency in existing processes—doing things faster, better, and with less labor where possible.

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Achieving consistent high performance is tough when companies are constantly reacting to immediate pressures. When building functions that are fit for the future, leaders must navigate accelerating changes in technology, consumer expectations, and society itself.

One way to counter putting out fires is to institute processes for making continuous improvements in how the supply chain and procurement functions perform. This approach helps reduce costs due to redundancies while also improving margins.

The end goal is to implement a culture of Continuous Performance Improvement (CPI) across the organization. CPI is about increasing productivity and efficiency in existing, sometimes already great processes—doing things faster, better, and with less labor where possible.

While there is no single method for driving CPI amid disruption, Strategy and C-suite leaders should apply a wide lens and a balanced approach. What’s likely to optimize results isn’t a focus solely on costs or solely on growth—it’s balancing both goals.

The supply chain continues to face significant disruptions. Examples include the military conflict in the Red Sea, lower water levels in the Panama Canal, and local bottlenecks in Baltimore Harbor following a bridge collapse from a freighter collision (the chart below illustrates supply chain shocks since 2020). Meanwhile, China is slowing down, and supply chains are shifting to countries like Vietnam. In the case of the U.S., many companies are reshoring to Mexico. With visibility a key driver of supply chain performance, artificial intelligence (AI) and technologies like digital twins are poised to power better planning and logistics.

Working with technology like generative AI (GenAI) and machine learning (ML) can fast-track and transform supply chain planning. The adoption of this technology opens supply chains to faster analysis and decision-making with new capabilities in segmentation, demand forecasting, and risk mitigation.

By using AI and GenAI, organizations can better grasp supplier production and market trends to analyze current consumption patterns for planning insights and deliver on end-customer expectations. For the back office, the technology improves operational workflows, enhances visibility about short-term material needs and availability, and provides real-time information for better decision-making.

KPMG offers a CPI approach designed to help organizations find a way to involve CPI with a variety of measures: for example, automating a repetitive process step; implementing quality control processes to reduce error rates; and tightening upstream tolerances to improve yield.

The pandemic accelerated a mindset shift around speed and urgency as businesses across virtually every industry worked to achieve timely, efficient recoveries. There simply was no time for business as usual. As companies continue to work through various levels of ongoing disruption and price volatility, time and budget remain scarce commodities across all organizational functions, not least of which is procurement.

Long before COVID-19, organizations had acknowledged the value of deploying innovative ideas and technologies across their operations. Today, leaders recognize the real imperative is to break down old structures and silos and work toward becoming more collaborative across internal teams and to establish end-to-end technologies to facilitate greater insights about latest market and price development and better decision-making. Identifying and unlocking greater value is the clear strategic objective.

With the increased need for organizational adaptability and the ever-growing democratization of data across the enterprise, the march toward digital procurement is fully in progress—from infrastructure upgrades and operational management to improving technology and the supplier experience.

If the move to digital procurement is a concern for your organization, CPI can be a viable strategy. Again, CPI is about increasing productivity and efficiency in existing processes—doing things faster, better, and with less labor where possible.

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