It appears that the nation will not suffer through a recession in the classical sense—declining gross domestic product—or at least, that any recession that does occur will be short-lived and relatively mild. But the slowing economy still creates both challenges and opportunities for businesses, and those that cope best will emerge stronger than their competitors.

What strategy is best? Many companies have rushed to cut costs, including laying off hundreds of workers. Some, but not all, of those cuts make sense. But the danger is that businesses could cut too fast and too deep, and then find themselves unprepared when the economy picks up. Particularly in an economy that relies heavily on a highly trained workforce, the question of layoffs is problematic. For publicly traded companies, Wall Street shows little tolerance for companies that do not adjust staffing levels when faced with slowing growth or even declining revenues. But management has to balance the high costs associated with layoffs plus the future high costs of recruiting and training employees when conditions improve with the demands for current cost cutting. There is no easy fix.

Not surprisingly, the issue of how businesses should respond to a downturn intrigues economists and business consultants. Mercer Management Consulting senior partners Robert Atkins and Adrian Slywotsky recently published a white paper called "Bring on the Recession: It's the best time to strengthen your strategic position." Their thesis, as the title suggests, is that businesses can use a slowdown as an opportunity to improve their competitiveness.

Their suggestions, boiled down, are as follows: focus on your best customers and become indispensable to them; cut costs selectively rather than across the board, while tightening inventories and receivables; invest in strategically appropriate talent and assets made available as a result of the downturn; and accelerate the investment in systems that address pressing business issues.

For some businesses engulfed in red ink or besieged by angry shareholders, it may be too late to adopt any such strategic initiatives. But for others, it's a good time to sharpen business practices developed when sales were more robust. Logistics managers have ample opportunity to help their businesses during difficult times. They can work with their carriers to improve processes and strengthen business relationships. They can work with both suppliers and customers to focus on distribution network issues, which in turn can help reduce inventories. And they can evaluate the potential value of electronic commerce links that help provide better supply chain visibility and reduce transaction costs. Such efforts to make your company stronger are necessary to prevent it from becoming weaker.