The white paper “Inventory management: inventory rationalization and right sizing strategies” points to the desperation of the current economic conditions , the critical role of supply chain management, and the undeniable need for the proper supply chain tool for monitoring, modeling, planning and alerting. As stated in the paper, many companies have lost the battle for profitability and have devolved into a survival mode.  i.e. the US auto industry.

Bad times will always highlight the poor decisions of the past. Unfortunately, too often the current economic conditions, good or bad, become the excuse for not making the right decision in the present. In good times, management can become complacent with the security that they are doing good. For those times, people need to be reminded of two clichés:

• The number one enemy of “best” is “good
• Better to dig a well before you are thirsty

There are many clichés that could be applied for bad times also. An expression that a mentor of mine told me in my younger days was, ‘If you can make dollars for pennies, it is not the right time to save your pennies.’  In bad times an understandable temptation is to avoid all expenditures. Instead care must be taken. Even more so in bad times the supply chain/inventory issues become like an anchor around the neck. The key is not to grow inventory in these times. The careful investment in supply chain processes and technology can lift the anchor, and bring the dollars for pennies.

The bottom line is that it is always the wrong time not to have the right tools and processes, especially for supply chain management. In the paper, Kerry Zuber goes through the many supply chain risk points and variables. He covers supply chain interruptions, both routine and catastrophic; demand volatility; buffer stock and buffer stock positioning; product life cycle; market and competitive positions; lead-time; waste elimination; lean manufacturing; just in time inventory, etc.  All of the different elements within the supply chain must be wisely balanced and integrated with appropriate practices applied to the proper conditions.

With the business environment in an extreme state of flux the supply chain tools and processes must be adaptive to the ever changing business needs.  Yesterday’s answers no longer apply to tomorrow’s questions.  In these depressed economic times, the companies that will survive and thrive will be those who invest wisely in, and pay acute attention to, their supply chain processes and tools  Short term cost cutting or avoidance measures can threaten the long term viability of a company.  Companies must be careful to understand the opportunity to use supply chain management as not only a means for survival, but a competitive weapon.

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