Lessons learned by recent recession
October 17, 2010 - SCMR Editorial
The global economic crisis of 2008 and 2009 provided significant disruptions and high demand volatility in supply chains for companies across many industries, said PRTM director, Rick Hoole.
Speaking at the 2010 Supply Chain Council Executive Summit in Houston last week, he said that the degree to which companies can capture benefit from an eventual upturn will depend largely on how they deal with five key supply chain challenges.
“We find that above average performers are more likely to document their process,” he observed.
PRTM’s annual survey, “Global Supply Chain Trends,” was also distributed at the executive summit. It found that in a number of sectors, demand and supply almost came to a halt, forcing companies to enact short-term measures to tightly manage inventories, costs, and cash flow.
“Compare this with early 2010, noted the report’s authors, Dr. Reinhad Geissbauer and Michael D’heur. “As the global economy continues to recover, most of the companies surveyed now believe there will be a significant upturn in demand from their customer base as well as a significant increase in company profi tability over the next few years.”
However, caution the authors, this widespread optimism may be premature.
“Our findings indicate that many companies lack the capabilities critical for meeting growing demand or for managing an increasingly complex and global supply chain,” they said.
Hoole agreed that, driven by short-term exigencies, many companies did not strengthen critical capabilities during the recession:
“Only a small percentage truly improved supply chain flexibility and processes needed both to capture an increase in demand and to better manage high volatility.”
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