to ask permission before making colour photocopies . This might appear extreme but it ’ s catching - last autumn , telco giant Verizon revealed plans to cut $ 10bn in costs by 2021 through the implementation of ZBB . “ The reason this has become sexy again , in terms of corporations , is because everything needs to be approved ,” says budgeting expert Neale Godfrey , head of educational organisation the Children ’ s Financial Network and former President of The First Women ’ s Bank . “ Because zero-sum budgeting really makes you examine your expenses , you can see where you ’ re spending your money . So , budget items aren ’ t just automatically pushed through anymore .”

This forensic approach is being applied to the supply chain at Unilever to accelerate improvement in its operating margin . “ We will continue to improve the mix of our business with margin-accretive innovation ,” says Unilever CFO Graeme Pitkethly . “ With the extension to logistics and the roll-out to smaller countries , we expect savings from ZBB and the organisational changes to be greater than € 1bn [$ 1.22bn ] by 2019 . We expect to be able to take more of our savings to margin , increasing our retention rate , while still investing sufficiently for competitive growth .”

So , how can businesses further respond to this ongoing challenge of beating the budget ? “ Leading companies are breaking this cycle with ZBSC ( zero-based supply chain ) – part of ZBx ( zero-based mindset ) – a way to drive profitability that emphasises the future over the past ,” says Accenture . “ ZBSC can help companies capture supply chain value in a rapidly changing world .” Accenture Strategy Experience research reveals ZBSC approaches can drive 5-10 % rapid COGS savings and a COGS-to-revenue ratio of up to 600 to 800 basis points over time . With only 24 % of operations executives affirming they have an agile operating model fit for purpose , it ’ s time to consider the building blocks towards a ZBSC solution which offers an end to endless loops …

A closed-loop approach using forensic analytics and insight from company and industry best practices addresses true , not perceived , gaps and enables continuous renewal .

36 February 2018