McKinsey research identifies six management practices used by companies with high-performing supply chains, including segmenting supply chains to get control of complexity, applying lean tools, and tailoring supply networks to optimize service and costs. The findings have implications for executives in high tech, manufacturing and assembly, pharmaceutical, and retail industries.

Customers continue to demand greater value at ever-lower prices. But for many companies, the ability to produce savings through more traditional cost-cutting measures is nearly exhausted. The solution: Combine cost-cutting initiatives with design and development activities, using cost-driven product and service innovations to create new streams of profitable growth.

Designing a manufacturing network entails devising and managing flows of innovation and know-how—not just determining what to produce and where—and organizing the resulting logistics flows.

Though often missing, a formal operations strategy can guide the crucial decisions that build competitive advantage.

Private label products, or store brands, can bolster a store’s market share and positively impact retail sales. But what effect do private label products have on the supply chain? Is introducing a store brand always a good idea, or can it have detrimental effects as well? Marc Sachon and Víctor Martínez de Albéniz propose a model that can help retailers determine whether introducing a private label product is a wise idea.

Buffeted by years of offshoring, formidable Asian competitors and a global economic downturn, some companies are finding ways to make manufacturing in the U.S. a competitive advantage.

Fixed costs turn growth into profit. But they can also turn declines into big losses. Variabilization—transforming your fixed costs into variable ones—offers an attractive alternative. A variabilized cost structure is responsive, adapting rapidly to both increases and decreases in demand. Many companies are doing more than variabilize their own costs, they are developing and offering “variabilization solutions” to their customers. This trend suggests that the basis of competition will shift from scale to agility, orchestration, and risk management.

The A.T. Kearney Assessment of Excellence in Procurement is the most comprehensive global study of supply management best practices. In the May/June issue of Supply Chain Management Review, Editorial Director, Frank Quinn interviewed A.T. Kearney Partner and AEP co-leader Randy Watson. In the interview, Watson highlights the traits of supply management excellence that differentiate leading companies from followers. There are three important factors: a clear mandate from management, an unswerving emphasis on delivering value, and a willingness to invest in people, processes and technology. Drawing on the survey findings, Watson tells how companies can get on track to develop these competencies in their own organizations.

Risk—particularly supply chain risk—has become ubiquitous as globalization causes supply chains to lengthen. Accenture and Oracle combine forces to provide a point of view that will help companies understand the nature of supply chain risk—and what they can do to mitigate it.

Business and IT managers have failed to get at the root cause of Balanced Scorecard ineffectiveness. Getting the most from corporate data will continue to be elusive until business management strategy and data management architecture are aligned.

Procurement mastery—significantly outpacing competitors in areas such as sourcing, category management and supplier relationship management—can be immensely profitable and yet a surprising number of companies never implement a procurement-optimization effort. Accenture can help companies understand the nature of procurement mastery—how and why to achieve it, and how it contributes to high performance.

Companies compete in a multi-polar world—an environment characterized by a new and more complex phase of increased economic interdependence across multiple centers of economic power and activities. Accenture research into global operations reveals that succeeding in this environment demands a new way of thinking about global operations. In particular, it points to five guiding principles that can position companies for high performance on this new global stage.

Procurement lies at the heart of a successful green strategy.

As products become commoditized and customers more demanding, service management is an increasingly important enabler of high performance. Accenture leverages its High Performance Business research and extensive client experience to identify the challenges to the mastery of service management, and outlines the common practices of the masters in this section of the supply chain.

Increasing globalization is leaving manufacturers no choice but to change the way they conduct their business, starting with reorganizing their supply chain processes. More and more, these organizations are opting to streamline their in-house operations by steering their supply chains toward horizontal or virtual integration. But many manufacturers have found that the software technologies designed for the vertical supply chains of yesterday cannot support this growing trend in supply chain management (SCM).

Consolidating supplier markets, rising energy prices and the growing demand for raw materials in emerging markets have fundamentally changed the purchasing framework. Suppliers are more powerful than ever, which means buyers must adjust quickly to a new playing field.

A.T. Kearney developed The Purchasing Chessboard — a compilation of insights and experience from thousands of purchasing projects performed worldwide—to help procurement professionals master the tools of their trade.

The holy grails of supply chain management are high speed and low cost -- or are they? Though necessary, they aren't sufficient to give companies a sustainable competitive advantage over rivals. Here's what else your company needs.

Across industries, companies are dealing with ever-increasing transportation costs due to rising energy costs, complex supply chains, and a competitive marketplace where customers are becoming more demanding and therefore shipments are becoming more fragmented. With costs that approach 5 percent of total sales and 15 percent of the cost of goods sold, reducing transportation costs can be tantamount to a company’s success — if not its survival.

Published jointly by BCG’s Operations practice and The Wharton School, the report is the first in a four-part series exploring various operations topics. It features thinking from many BCG experts as it explores several different aspects of this important topic for our clients. It includes articles about developing the optimal supply chain, coordination and collaboration, flexibility and enterprise systems.

Business cares so much about quality because quality – however defined – can be clearly linked to some measures of economic value and business success. Given the relationship between quality – once achieved – and value, corporations have good reasons for remaining committed to the quality vision. But many firms are having a hard time applying quality principles throughout their operations.

Many of the TQM projects tackled by corporations thus far have focused on "natural“ processes. In the manufacturing area, for example, most processes comprise easily identifiable tasks, the customers are known, and the success or failure of efforts aimed at quality improvements are fairly easily measured. Many companies are now struggling to extend the application of TQM tools to areas outside manufacturing. They are discovering that the key principles of quality improvement are often difficult to implement in the nonmanufacturing world.

Perhaps most important, the art of managing a corporation – and in particular setting its strategic direction – is not typically thought of as a process. The way to make quality-improvement effective in such areas as customer service, marketing, and R&D is by having a clearly articulated strategy that ties all those efforts together and focuses the corporation – including top management – on strategic quality improvement.

Editor's Note: though written back in 1991, this article offers an interesting look at how strategy formulations have evovled over the years.

To a CFO, inventory is often a line item on the balance sheet that measures inventory turns against the income statement (cost of goods sold). This COGS analysis provides an overall view of how much inventory is held across the company’s supply chain. What it doesn't provide, however, are the reasons why the inventory is there in the first place or whether the return on each inventory dollar is sufficient. Is there too much inventory at the store? Is there too little at the warehouses? Answers to these questions begin with understanding what drives inventory levels.

Ever seen books with their covers torn off? This is one of the telltale signs that buyers and suppliers, seeking to optimize their supply chain, have struck a buy-back agreement. While buyers and suppliers need to negotiate such types of deals, finding a mutually advantageous arrangement is no easy feat, especially when it comes to a field as complex as supply-chain economics. Considering all the means available for buyers and suppliers to improve efficiency in their supply chain, professors Víctor Martínez de Albéniz and David Simchi-Levi consider a counter-intuitive mechanism to help buyers and sellers negotiate wisely - wholesale price renegotiation - which they believe can best reduce inefficiency and increase profits for everyone involved.

The purchasing function is acquiring high priority in the eyes of senior management for a number of reasons. First, increasingly global strategies for marketing and manufacturing require equally global approaches to sourcing. The skills and knowledge required for effective worldwide sourcing are quite different from those typically found in a domestic purchasing organization. Furthermore, in a global company, purchasing plays a far greater role in gaining and maintaining competitive advantage, particularly in industries whose products evolve rapidly.

Companies often respond to competitive pressures by adding unnecessary complexity to their business. Including complexity management as part of a comprehensive performance management program can bring competitive advantage.

Your customer contact center is more important to your customer relationships than you think, especially if you know which calls to keep and which calls to outsource.