It’s easy—and understandable—to feel powerless and to continue doing business as usual until the trouble becomes acute. But some fast movers have begun taking important steps to improve their agility and reduce their exposure to supply risk. How? Instead of trying to cut costs silo by silo, these companies take an integrated view of operations (product design, procurement, manufacturing, supply chain management).
The prize is huge for manufacturers that get it right. Bain research shows that companies can generate an average of 5 percent to 10 percent of savings in each category and that an integrated approach could conceivably generate a 15 percent to 30 percent net margin improvement—these numbers can make a significant difference under normal conditions and provide lifelines under duress.
A full-blown trade war risks leaving companies with stranded assets. Imagine if a key supplier or manufacturing site is located in a new high-cost zone or, worse, no longer has access to certain markets. Taking an integrated view of operations helps leadership teams identify the alternatives that will deliver the best overall improvement in performance while increasing the company’s resilience.
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