Cost-cutting or cost optimization? How supply chain leaders are responding to uncertainty

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Cost-cutting or cost optimization? How supply chain leaders are responding to uncertainty

  • Cost-cutting or cost optimization? How supply chain leaders are responding to uncertainty
2 minute de lecture

As the transformation of global trade accelerates, it has become clear that uncertainty is the new normal. Technological innovation, frequent changes in tariff policy, geopolitical tensions, inflation, and climate change are forcing companies to regularly reassess and readjust the assumptions that drive their supply chain decisions.

At the same time, economic uncertainty is putting pressure on customer demand, revenue forecasts, and profit margins. According to a recent survey from Gartner®, 80% of executives are anticipating a temporary economic contraction or transitory recession, which is likely to bring budget cuts in its wake.

For many companies, the go-to response to these twin business challenges is to reduce costs across all business functions, including the supply chain.

But cost is more than just a number on the balance sheet.

In today’s complex supply chains, any change—including reductions in spend—impacts the entire business, so supply chain leaders should think strategically before acting.  

Controlling costs in service of business objectives

Too often, cutting costs is a reactive move that companies make when they’re under pressure. While these cuts can help reach short-term budget objectives set by the CFO, they can harm the business in the mid- to long-term.

Indiscriminate cuts can negatively impact the delivery of goods and services to customers, potentially damaging the company’s value proposition, brand identity, and top-line revenue.

Reactive cost-cutting also alarms investors, who view it as a defensive move by a business unable to compete.

Instead, the goal should be to balance immediate pressures with long-term strategic objectives, embracing innovation that improves performance and creates value. Redundant or otherwise unnecessary spending should be redirected into investments that enhance performance and ultimately drive more value—and top-line revenue.

So, what’s the best way to go about optimizing costs? 
 

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Supply chain redesign: Low-hanging fruit or a risky bet?

Research from Gartner has shown that more than 50% of supply chain costs are driven by strategic design decisions around physical assets like manufacturing facilities, distribution centers, and sources of supply.

It’s no surprise that redesigning the physical infrastructure of the supply chain is the most effective way to achieve sustainable long-term cost savings—and many companies are doing just that. A survey of chief supply chain officers (CSCOs) found that:

  • 73% of respondents added or removed production locations from their supply chain networks between 2022 and 2024
  • 50% added new supply locations with existing supply partners
  • 48% were pursuing new supply locations with new supply partners

 

But while structural changes represent the greatest potential reward from cost optimization, they also carry the greatest risk.

That’s because infrastructure changes are complex and time-consuming. The 2025 Gartner Tariff Volatility Poll found that most companies require at least 12 months to regionalize just 25% of their supply chain capacity, with 39% needing 19 months or more.

Those long-time horizons can be a big problem given the volatility and uncertainty in today’s marketplace. By the time changes to the physical network have been implemented, the competitive landscape and the business's needs may have changed significantly.

Rethinking supply chain processes: Lower risk, but still high reward

Companies seeking to optimize costs without undertaking major infrastructure changes are adopting a different approach. These companies focus on improving their processes—often using technology like AI—to cut costs, while simultaneously increasing efficiency and productivity.

This disciplined, forward-looking mindset allows companies to control costs with an eye toward resilience and growth. Here are three strategic moves that companies can make now to cost-optimize their supply chains:

#1 Redirect spend away from manual or redundant processes

Many supply chain processes grow organically over time as companies mature, often leading to inconsistent rules and redundant workflows where multiple teams or functions have overlapping responsibilities. Many companies have not kept pace with the development of new technology and are still relying on outdated tools and tactics to manage their supply chains.

Many processes within the supply chain can now be automated. For example, generative AI can be used to auto-generate and consolidate shipping documents, identify errors, and make corrections that a human would normally need to do. This both frees up workers to focus on other areas and allows the budget to be easily cut or rerouted to more productive areas of the business.
 

Learn how BevChain saved more than 1,000 work hours in one year with automation

Beverage logistics company BevChain streamlined its transportation operations by removing duplicate charge codes and eliminating the need for manual adjustments related to double pricing. 

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#2: Reengineer existing processes to be more efficient, productive, and nimble

While technology makes existing workflows more efficient and productive. Instead of working in silos with limited collaboration, technology enables teams to have better communication, visibility, and control.

Digital solutions can help track assets, visualize work environments, and enable real-time adjustments in workflows with rapid communication. The result is more efficient processes that can respond quickly to disruptions and deliver significant savings to the bottom line. 
 

How Accel improved warehouse productivity by 35%

By implementing voice controls and real-time product tracking across 19 regional warehouses, Mexican logistics leader Accel Logistics was able to increase productivity by more than 35%

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Stage 3: Reorient the supply chain toward key business objectives

Finally, in addition to improving daily operations, cost optimization can directly impact outcomes felt across the business. When companies are under pressure, supply chain teams may get bogged down in managing the day-to-day needs of the business and lose sight of strategic objectives. Technology offers ways to maintain focus on the bigger picture.

AI tools enable supply chain leaders to analyze vast amounts of data, identifying patterns and potential problems before they occur. This deep, real-time visibility into the entire supply chain drives faster decision-making, more accurate forecasting, and smoother adaptation to disruptions. Regardless of the company’s specific goals, the supply chain can be adjusted to maximize its impact on those desired outcomes.

Smart cost optimization enables supply chain leaders to turn the challenge of budget cuts into an opportunity to improve operations and meet business objectives. By taking a thoughtful approach and implementing the right technology, supply chains can become more resilient and agile.