Applying Zero-Based Budgeting To Your Supply Chain

Companies across industries are stuck in a downward spiral with their supply chain cost reduction initiatives. Even with all of their efforts, they see minimal or no changes in their COGS-to-revenue ratios over time. At least half of many companies’ costs typically reside in the cost of goods sold (COGS), yet most are seeing little sustainable impact on their bottom lines. Companies can find a way to break this costly cycle by applying zero-based principles across their supply chain (“zero-based supply chain” or ZBSC) and integrating this approach with their continuous improvement programs. ZBSC approaches can trigger COGS savings of up to 10% and a COGS-to-revenue ratio of up to 800 basis points, Accenture says.

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