Reducing costs is no longer paramount in supply chain management, according to executives surveyed for a report by management consulting firm, Bain & Co. Instead, increased flexibility and resilience trump cost and improved customer service, and supply chain reinvention is now a “CEO-level problem and opportunity,” concludes the report, entitled “How CEOs Can Balance the New Supply Chain Equation,” released February 21. Meanwhile digital enablement and sustainability are rising as concerns, too, while product or service quality is comparatively declining in importance in 2024, the survey found.

“The traditional formula that governed supply chain decisions no longer suffices,” say the report’s authors, Hernan Saenz, Tracy Parker, Adam Borchert, and Joshua Hinkel. “Now, the question CEOs must answer is no longer, ‘Should we reinvent our supply chain?’ but rather, ‘How should we reinvent our supply chain?’”

The most effective business leaders are applying what they’ve learned over the past four years of global supply chain upheaval to better manage through turbulence, the report says. At the same time, they’re grappling with the supply chain implications of several big shifts in the business landscape: labor challenges, stakeholder pressure to decarbonize and improve sustainability of operations, evolving customer expectations, and transformative technologies such as artificial intelligence. “They all recognize that turbulence, and its effect on supply and demand, will not subside.”

Bain surveyed 300 executives in September 2022 to look three years into the future, with the results being made public now in this report. More than half said their companies plan to increase their supply chain onshoring or “near-shoring” between 2023 and 2025, while decreasing their dependence on China. Bain says the calculus on low-cost offshore manufacturing hubs has changed as a result of geopolitical instability and the desire to deliver products faster, more reliably, and with a lower carbon footprint. “Shorter supply chains can address all three considerations,” the report’s authors say.

Feeding increasingly available supply chain data into advanced software models and artificial intelligence technologies will unlock huge benefits, the authors advise, such as more easily spotting and responding to risks and disruptions, adapting to customer needs and customizing by segment, making more informed decisions about supply chain investment trade-offs, and better tracking and certifying sustainability outcomes.

Companies that get supply chain trade-offs right will outperform strategically and set new standards of operational excellence. They’ll also find the breakthrough business opportunities that a supply chain reset presents, deploying capital toward bigger and bolder moves. For incumbent leaders, it’s a chance to solidify their position. “For followers,” the report argues, “this is an opening to leapfrog the competition.”