Just when everyone has been fully consumed dealing with the downturn and it’s effects on the supply chain, there’s growing signs that a bottom is near.  While there are very few suggesting this will be a rapid return to strong growth, any upturn would be welcomed. As you would expect, there’s no consensus view on what’s going to happen, but here is some of the evidence:

• ISM: Good and Bad News for 2009 – The Institute for Supply Management’s (ISM) April report showed the pace of decline slowing (not positive yet, just less negative).  The story ends with “There is this potential that we might see the bottom very soon, if we’re not already there.”  This is also covered in “Manufacturing slowed less than expected in April” and “U.S. manufacturing continues to contract.”
• China’s manufacturing sector returns to growth – China’s manufacturers increased output and hired more workers in response to a spike in new orders and declining inventories.  This is also covered in “China says manufacturing expanding.”
• No rebound just yet – The electronics supply chain remains pessimistic and appears to believe we have not yet seen the bottom of the recession, according to a survey of more than 230 electronics supply chain decision makers.

A cloudy picture for sure, but there are glimmers of hope on the horizon.  So, then you need to be asking if you are sufficiently prepared to deal with an upturn?  Has your thinking been too short-term and cost reduction focused lately and are you now potentially in a tight spot should things begin to improve?

In an interesting post on this topic, Kathleen Geraghty of the TFI Quarterly Forum challenges companies to ask if they are “Overreacting to the economic downturn?“  I’m not sure I would characterize it as overreacting as much as I would taking your eye off the ball.  In a recent post entitled “Market leaders accelerate in the turns” I shared the story of Cisco and their mindset that you stick to your strategy no matter what is going on, but you adapt along the way.  I wonder how many manufacturers have this mindset vs. those that have let the downturn alter their strategy (meaning, has cost reduction become your strategy?  If it has, then I would agree with Kathleen that the question may be whether or not you’ve overreacted to the economic downturn).

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Tags: Supply chain management
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