The Post-Recession Supply Chain—Any Different than Before?
Posted 07-30-2010 at 02:30 PM by Albert Fong
With the economy still on the mend, economists are easy targets for humor. I wouldn’t doubt that many may even believe that an economist is someone who gets rich explaining to others why they are poor. The same can be said about supply chain industry forecasters who have wide ranging opinions on whether companies have learned their lesson from the recession. That point is clearly illustrated in this recent lessons learned article. The theme focuses on whether businesses will change their supply chain practices in a post-recession world. If the opinions are any indication, the answer is no, and maybe yes.
Have companies changed their supply chain practices? For years, the concepts of supply chain collaboration and visibility have been preached as the cornerstones of everything from inventory management to fleet maintenance. Yet, when you still have over 600,000 warehouses in North America without a computerized inventory management system, you realize that preaching isn’t the same as practicing. While it probably made sense for companies to upgrade systems and outsource logistics functions during the downturn, many did the opposite by bringing them in house. Even now in the post-recession economy when outsourcing functions is a prudent strategy for managing growth, companies are reluctant. On this count, the answer would be no.
On the other hand, companies are paying more attention to their business relationships. Undoubtedly, many long-standing relationships with partners were strained or lost in the past two years negotiating over a few dollars. With demand slowly edging back up, I believe many companies are approaching relationships with a stronger focus. In a post-recession period, establishing the right network is essential for any degree of success. So, in terms of understanding the importance of collaboration, have companies changed their view of what constitutes supply chain success? This one gets a tepid, slightly warm yes.
Where does that leave us? You have companies who understand the importance of collaboration, and I think more so than in the past. I see it in the number of inquiries from businesses who want to learn more about managing their inventory. There is a genuine interest in improving supply chain relationships through WMS, TMS and labor management tools among others. But, a hurdle for some is overcoming that hesitancy. So in short, the answer to whether companies have changed their supply chain practices comes down to this—not until they overcome their fears.
Have companies changed their supply chain practices? For years, the concepts of supply chain collaboration and visibility have been preached as the cornerstones of everything from inventory management to fleet maintenance. Yet, when you still have over 600,000 warehouses in North America without a computerized inventory management system, you realize that preaching isn’t the same as practicing. While it probably made sense for companies to upgrade systems and outsource logistics functions during the downturn, many did the opposite by bringing them in house. Even now in the post-recession economy when outsourcing functions is a prudent strategy for managing growth, companies are reluctant. On this count, the answer would be no.
On the other hand, companies are paying more attention to their business relationships. Undoubtedly, many long-standing relationships with partners were strained or lost in the past two years negotiating over a few dollars. With demand slowly edging back up, I believe many companies are approaching relationships with a stronger focus. In a post-recession period, establishing the right network is essential for any degree of success. So, in terms of understanding the importance of collaboration, have companies changed their view of what constitutes supply chain success? This one gets a tepid, slightly warm yes.
Where does that leave us? You have companies who understand the importance of collaboration, and I think more so than in the past. I see it in the number of inquiries from businesses who want to learn more about managing their inventory. There is a genuine interest in improving supply chain relationships through WMS, TMS and labor management tools among others. But, a hurdle for some is overcoming that hesitancy. So in short, the answer to whether companies have changed their supply chain practices comes down to this—not until they overcome their fears.
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