Supply chain management “anti-trends” for the down economy


There seems to be no shortage of discussion about the latest trends in supply chain management or any number of other topics for that matter.  We decided to take a look at this from a different perspective and think about the supply chain management “anti-trends” for the down economy.  I asked Trevor Miles for his thoughts and have added a few comments of my own.

  • Procurement practices will become more, not less, adversarial in 2009.  Despite the strong need to work more closely with their suppliers, possibly even offering them shorter payment periods, from a supply chain risk management perspective, companies will not do so. They will force cash-strapped suppliers to accept longer payment periods.  When the supplier files for Chapter 11 they will use this as proof that they took the correct course of action.  There will be enough occasions when they were right that everyone will ignore the majority of cases where they were wrong.  Companies that buck this trend and strengthen supply chain collaboration during these tough times will exit the downturn in a much stronger position.
  • Integrated Business Planning will remain a wish.  The social and cultural divide between Finance and Supply Chain, let alone the language divide, is too broad and most people lack the incentives to cross the divide.  Most supply chain people, especially manufacturing, are measured on asset utilization and production volume, not on satisfying customer demand profitably.  Most finance people are measured on aggregate key performance indicators (KPI’s) and have no knowledge of the ripple effect changes in one KPI can have on other KPI’s.  As a consequence, just getting Sales and Production to sit together to perform rudimentary demand/supply balancing is considered to be an example of sales and operations planning (S&OP).
  • Western brand-owners will lose a lot of market share.  For years the west has been outsourcing production to Asia, particularly China.  A minority have established their own production facilities, but the majority have outsourced to contract manufacturers.  As Asia emerges from the current economic slump, and Asia will emerge sooner than the west, many of the contract manufacturers will establish their own brands.  They will have better knowledge of the needs/desires of the consumer and much shorter supply chains.  Of course many western brand owners will respond appropriately, but the majority will still be designing products for western markets and trying to sell the products in Asia.

What do you think?  What supply chain management “anti-trends” do you think will emerge against conventional wisdom?

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