Sustaining Value from an Advanced Digital Supply Chain

Now more than ever, supply chains need to be resilient, agile, cost efficient, and sustainable. Supply Chain AI by BCG X helps companies optimize on all levels—with no tradeoffs.

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2pp-4pp

boost in EBITDA

10%-20%

decline in costs

5%-15%

increase in service levels

15%-30%

reduction in working capital

20%-30%

decrease in near-term CO2e emissions

About Supply Chain AI by BCG X

Supply chains act as our connective tissue, supporting growth and sparking innovation. But increasingly, they are the source of challenges and constraints. Rising costs, shifting demand, critical disruptions—many companies are in a continuous cycle of assessing obstacles, identifying fixes, and hoping for the best.

Supply Chain AI, our digital supply chain offering, lets companies return to creating value. A combination of digital assets, supply chain experts, and data science and engineering talent, Supply Chain AI takes a holistic approach to transforming a company’s supply chain, from strategy and design through integrated planning and optimized execution. Backed by a unique set of AI solutions from BCG X, we enhance seven key supply chain capabilities: network design and optimization, emissions baselining, risk management, end-to-end planning transformation, digital twin representations, control tower visibility, and logistics and distribution automation.

Supply Chain AI helps organizations build for the future, realizing not only the power of digital supply chain technologies but also their own full potential.

Our Approach

Combining People, Processes, and the Power of Supply Chain AI

The supply chain of the future must be digital, resilient, and sustainable. To deliver, companies need the right strategy and the right mix of human and technical capabilities. Our approach amplifies the power of AI in the supply chain—but just as crucially, we help develop the plans, processes, skills, and culture that fuel and accelerate transformation.

Our digital supply chain consultants work in agile ways that bring out the best of both people and tech. Individual squads have expertise in, and accountability for, specific supply chain topics, and they focus on flexibility and enablement. We address gaps by building on top of existing solutions, realizing the full value of a company's data and in-house systems. We also draw on our world-class change management capabilities to ensure success, now and for the long term. Our customizable approach, fit to a client’s unique goals, follows a general paradigm:

Assess current state

We start by leveraging industry-specific context and experience to develop hypotheses on where value is typically created. By assessing your current digital maturity within supply chain processes and existing AI capabilities, we can identify the pain points and opportunities that matter most and lay a vision for unlocking the potential of AI and digital supply chain technologies.
Define end state

We create a strategy and prioritize use cases that help map and fund the overall journey. We focus on quick wins to build momentum and then move to the next wave of use cases and repeat. By taking an iterative approach and steadily building out use cases, companies can see the end state early on, justifying their decision to keep turning the investment knob.
Realize value

The iterative use case approach lets companies build their technical capabilities gradually while realizing near-term value. Companies develop just what’s needed to fuel a specific use case and benefit from their new capabilities. A key enabler is an individualized data and digital platform, which lets companies add capabilities in a modular, flexible way across their end-to-end transformation.
Develop foundational capabilities

Wave by wave, as new capabilities come online, companies build a foundation for AI in the supply chain. Our digital supply chain consultants help companies upskill talent in digital, AI, and data and technology architecture. We also assist with democratizing AI and analytics, a practice that is critical to success.

Emerging technologies, particularly advanced analytics and generative AI, enable businesses to optimize their supply chain processes and decision making, predict flash points, and quickly adjust course. But digital supply chain technologies cover a lot of ground. The aim, and often the challenge, is to use them where they matter most.

Supply Chain AI has a set of specialized AI solutions built by BCG X, that can be combined and customized in ways that maximize value—keeping the focus on the most important opportunities and issues. Each solution provides a rapid diagnostic to uncover high-value use cases, establishing a complete vision before recommending the right combination of people, processes, and technology. Supply Chain AI can be tailored to a company’s unique targets and benchmarks, and our digital supply chain consultants can build and deploy AI-enabled processes in any environment.

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Network Design and Optimization

A key supply chain challenge is identifying the optimal manufacturing and distribution network. This solution, powered by Supply Network Optimization by BCG X, identifies the ideal locations for factories and other facilities. It also fine-tunes the network through efficient assignments, transportation, and inventory allocation.

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Emissions Baselining and Reductions

As companies accelerate their journey to net-zero, the supply chain has become a focal point for action. This Supply Chain AI solution uses CO2 AI—part of our partner ecosystem—to trace emissions across the supply chain, helping companies identify opportunities to shrink their carbon footprint.

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Supply Chain Risk Management and Resilience

With this solution, companies leverage digital and AI-enabled business processes to enhance insights and decision making to manage risk. It features powerful technology to identify risks, for example, but it also blends the best of human and technical capabilities, so shocks don’t become disruptions.

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Digital Supply Chain Planning Transformation

Powered by End-to-End Plan by BCG X, this solution addresses all key facets of end-to-end planning—including forecast, financial planning, and supply optimization. Leveraging proven cross-industry experience and transformative playbooks, it offers a scalable approach to re-engineer cross-functional processes while capturing service level, cost, and cash impacts.

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Digital Twin

Powered by Value Chain Digital Twin by BCG X, this solution is customized for energy, heavy industries, and infrastructure players. It boosts the value and resilience of supply chains, providing end-to-end control through transparency, prediction, simulation, and automation.

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Control Tower

This solution helps companies identify risks before they become crises. It reveals potential disruptions, such as supply constraints or shifts in customer demand, that businesses normally wouldn’t see in their internal data sets. Companies can quickly take action without skipping a beat—or a shipment.

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Logistics and Distribution Automation

Digital supply chain technologies can transform operations. This solution uses AI to automate warehouse tasks, streamline transportation processes, optimize scheduling, automate material flows, and fulfill orders quickly and accurately. The result: faster, leaner, and better operations.

Operational excellence for a health care logistics company

Through a multitiered transformation program, we helped optimize the client’s warehouse footprint and reduced network costs by lowering transportation costs and leveraging synergies. We deployed technology to facilitate planning, increase automation, and reduce manual labor and error rates. And we cut complexity in “kitting” via kit simplification and standardization. The expected outturn: annualized run-rate savings of up to $155 million.

$155 million

annualized run-rate savings

Increased value creation for a global steel producer 

BCG’s digital supply chain experts helped a global steel producer complete a comprehensive digital transformation. Using predictive analytics, we focused production decisions on optimizing margins by building a data management infrastructure and developing advance forecasting algorithms. The outcome: a boost in EBITDA of 2 to 4 percentage points and a transition to net positive from year one onwards.

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boost in EBITDA

Inventory optimization for a global medtech player

Using End-to-End Plan by BCG X, and next-generation analytical inventory models, we developed advanced forecasting tools to spark faster, more precise decision making. And to ensure that our client could build on this foundation long after we completed our work, we embedded new processes and upskilled in-house teams. The result: an inventory reduction of more than $100 million in the first 12 months and a 15% increase in forecasting accuracy.

$100 million

inventory reduction

Experts

Meet Our Supply Chain AI Consulting Team

Our digital supply chain consultants are thought leaders on AI in the supply chain—and hands-on practitioners who work side by side with clients on strategy, implementation, and industry-specific topics. Here are some members of our team.