Issue Value-first management moves procurement, product development, and supply chain to the centre

Summary

In its closing section, McKinsey states that value has become a central management priority for almost every consumer-facing business. Putting value first begins with taking unnecessary cost out of products and operations. The report lists ways to do this, including carrying fewer but better-designed SKUs, controlling input costs more tightly and redesigning products so they last longer and are easier to use while costing less to make. This shifts attention to procurement, product development and supply chain, which are often best placed to cut costs without hurting quality. McKinsey also urges companies to keep testing whether savings can be passed to consumers as lower prices, better quality or both. The alternative, absorbing all the gains into margin, may undermine the value proposition customers now expect.