Supply Chain Leaders Face The Cost Vs. Resilience Balancing Act

Supply chain leaders might be feeling a sense of whiplash. During the pandemic, supply chains were elevated from cost centers to strategically vital business functions. Resilience, flexibility, and agility became top priorities—even when they came with higher costs.

But the pendulum is swinging back. In a late 2024 survey by global consultancy EY, 88% of supply chain leaders said the C-suite once again viewed supply chain as a cost center. Seventy-eight percent reported a renewed focus on cost management. A similar survey by professional services giant KPMG echoes this trend: “When executives face a tradeoff between agility and cost, it is cost that wins out,” the report concluded.

This shift isn’t because the world has become more stable. Tariffs are rising, and global disruptions remain a constant threat. But inflation—and perhaps a bit of complacency—has nudged companies back toward prioritizing cost in supply chain discussions.

“I don’t think any company is moving away from resiliency,” says Michel Roger, managing director of supply chain and operations in the SAP business group at Accenture. “It’s just that they’re being more cautious about its cost. Maybe it’s not resiliency at any cost, but resiliency at a reasonable cost.”

This leaves the resilience-versus-cost debate somewhere in the messy middle. One may take precedence over the other depending on the moment—but both remain top of mind for supply chain leaders.

So how can leaders strike the right balance? In conversations with experts, we identified four key levers supply chain leaders can use—along with practical advice for applying them.

Lever 1: Speak the C-suite’s Language

With cost concerns back in focus, executive attention to supply chain risk has waned. To re-engage the C-suite, supply chain leaders need to align their efforts with broader business goals—and back them up with metrics that matter.

Instead of focusing solely on operational metrics like cash-to-cash cycles, leaders should connect their KPIs to strategic outcomes such as increased revenue, improved customer satisfaction, and market share growth.

This also means breaking down silos. According to EY, 97% of supply chain leaders face challenges with metrics due to poor integration across functions. A better supplier might improve customer satisfaction—but without shared data from marketing and procurement, supply chain teams may never know.

Lever 2: Use Geography to Your Advantage

Relocating supply chains closer to end markets can reduce lead times, skirt tariffs, and increase responsiveness. But the decision-making calculus has shifted. Labor, production, and transportation costs have changed significantly in recent years.

“The original global sourcing model was built on low labor costs in Asia and manageable transportation costs,” says Mary Rollman, principal and U.S. supply chain leader at KPMG. “But labor costs are rising in Asia, and transport costs have become volatile.”

Today, companies must weigh new risks—like geopolitical tensions that threaten shipping lanes—and model total cost-to-serve scenarios across regions. “You need a clear view of the true costs of serving each market from different parts of the world,” Rollman says.

Lever 3: Factor in Regulatory and Tax Arbitrage

Tax laws and regulations also play a major role in supply chain strategy—but navigating them is increasingly complex.

“You really have to get down to what you’re manufacturing, where your raw materials come from, and what laws and tariffs apply,” says Doug Zuvich, a tax partner at KPMG.

The ability to quickly adapt to regulatory shifts is now essential. When tariffs on Chinese imports were introduced during the first Trump Administration, many companies pivoted to production in Mexico. Now, new tariffs target Mexico and Canada.

One Covid-era strategy still offers value: maintaining a regional network of subcontractors. “If Colombia suddenly gets hit with tariffs, having established relationships elsewhere in Latin America can help you pivot quickly,” Roger says.

Lever 4: Integrate Isolated Technology Initiatives

Despite heavy investment in supply chain tech, many organizations haven’t seen the promised productivity gains.

The problem? A lack of integration.

“You may have 15 different applications supporting your supply chain, but much of the data is stuck in silos,” says Takshay Aggarwal, EY’s Americas supply chain growth platforms leader.

Functional managers also tend to optimize for their own goals. A logistics manager, for example, might choose the cheapest shipping method without considering the broader business impact of slower delivery times.

What’s needed is a unified system that consolidates data and provides an end-to-end view. This enables companies to evaluate tradeoffs and optimize for resiliency, cost, and performance in a more holistic way.

Striking the Agility-Cost Balance

In today’s uncertain economy, keeping costs under control is essential. But resilience still matters—and so does the ability to respond faster than the competition.

“It’s not just about lowering supply chain costs,” says Roger. “It’s about how quickly you can react—and reacting faster than others. That’s a competitive advantage.”

This story also appears on SAP.com.