Ghosts of quarters yet to come
Peter Bradley, Editor in Chief -- Logistics Management, 1/1/2002
Is the recession over just as it's become official that we have one? A few optimistic economists, looking into whatever passes for their crystal balls, think the recovery is under way. But looking at the way many businesses are acting, you'd think we were in the throes of a deep depression.
The reason for that, at least among publicly traded companies, appears to be the continuing focus on quarterly results. As a consequence, many businesses make decisions that are short sighted, ensuring the largest numbers they can produce for the end of March, June, September and December, but with only passing regard for what effect severe cost cutting and layoffs will have when business turns up again.
But from the perspective of how best to manage a business for the long term, laying people off when their talents may be required within months, if not weeks, is short sighted in the extreme. That's especially true when the victims are recognized by fellow employees as hard working, dedicated, and talented. Such action not only costs the company the talents of the dismissed employees but also raises the level of distrust among those left behind. Many businesses tout the idea that employees—like shareholders—are stakeholders with a common interest in corporate success. But when the going gets tough, it's the employees who go, often with no more than a flip "best wishes." Those actions belie these stakeholder claims, and corporate executives' future efforts to make that boast are sure to be met with cynicism.
In the current recession, the problems created by a weakening economy were compounded enormously by the terrorist attacks in September. The economy nearly came to a standstill for a few days, and a shaken nation retrenched for a while before consumer and business confidence began a slow recovery.
The post-Sept. 11 business environment has had a profound effect on logistics managers, as many of the toughest new laws and regulations have been aimed at the transportation sector. The long effort to build more efficient supply chains was threatened by new precautions needed to ensure and assure public safety. The good news, as reported by Senior Editor James Cooke in the story beginning on page 31, is that although companies will be forced to modify their supply chain management strategies, the fundamental practices developed over the last 20 years or so are proving strong enough to withstand these challenges. The new regime, with its heightened security restrictions, will impede the movement of goods through the supply chain somewhat, but logistics managers and their supply chain collaborators continue to find ways to keep moving inventory quickly and with greater visibility. Arguably, supply chain efficiency can help hasten the recovery; companies that have developed efficient inventory management practices will find themselves well positioned to respond quickly when demand picks up. That is, they'll be ready if the right people are still there and still believe talent and effort will be rewarded.
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