BCI launches new framework for supply chain optimization
Buck Consultants International (BCI), a global management consultancy, has released its “DE-5” framework to help multinational firms improve their supply chains.
Based on decades of data points, the framework aims to reduce risk in five major operational areas and drive resilience in an environment increasingly characterized by volatility and complexity.
De-coupling. Increasing trade and geopolitical tensions, as well as extended pandemic lockdowns and the risk of future outbreaks, have led companies to decrease their Chinese manufacturing footprint. Most goods continues to be made in China because of its established industrial base and competitive labor costs, but there have been moves from companies such as Apple to shift some production to India and Southeast Asia.
De-single sourcing. The pandemic exposed the fragility of global supply chains, and especially the just-in-time manufacturing model. “There was a point during 2020 when the operations of more than 90% of automotive manufacturing plants in Europe were affected due to lockdowns,” said Rene Buck, CEO of BCI. “To address this, many companies are now looking to multi-source.”
De-risking supply chains. Companies looking to reduce supply chain risk can implement more intensive inventory planning, including boosting the amount of inventory held. Leveraging AI-powered demand forecasting is another avenue.
De-centralizing production. Also known as near- or reshoring, it entails bringing some portion of production closer to the home market. Some multinationals might locate plants in Eastern Europe for the Western European market, or in Mexico for the US market.
De-carbonization. Regulations and client/investor expectations are pressuring companies to reduce emissions in their supply chains. Reshoring plays a dual role by also reducing shipping emissions. “Having to retool production processes to comply with environmental regulations is a huge cost, so companies need to plan their course of action effectively to ensure that production is not impacted,” Buck said.
According to BCI, implementing a successful “DE-5” strategy requires an end-to-end value chain vision – including optimized manufacturing footprint and distribution network. Companies also need a scenario approach that allows for various strategic options, locations, and production volumes to be tested.
