News & Views

January 22, 2009 from Supply Chain Digest – “Well, we may be lacking in orders, but during these tough economic times we certainly aren’t lacking in ideas for what to do with your supply chain during the downturn…”

180 View (written by Lawrence Young) – This article is chock full of ways you may be able to ‘squeeze the fat’ out of your supply chain – a great idea in good times, and a must during these tough times.

The author has collected ideas expressed by numerous industry pundits and corporate executives and managers on ‘what you might be doing now to manage better during this period, or to sow the seeds of success for the recovery that, Yes, will surely come’.
Some of these ideas to weather the storm ahead include:

1. Improve working capital/cash flow by reducing your inventory levels. Consider pruning product portfolios, but avoid using a ‘meat cleaver’ approach which could have a big negative impact on customer service levels
2. Re-examine your routing guides for internal (freight-out) and supplier (freight-in) shipments
3. Increase your level of vigilance and security to counter the increased risk of fraud and theft in supply chain operations
4. Collaborate with your suppliers to eliminate unnecessary costs
5. Get creative on the sell side of your business i.e. prepare a substitution list for all SKUs and suppliers
6. Optimize your distribution and fulfilment processes by bringing your company’s creative minds together and brainstorming the heck of your operations i.e. can you develop a cross-dock process to ship backorders more quickly and less expensively?

To benefit from these ideas you will almost assuredly need to commit some energy and resources, understanding that there may be some ‘short-term pain for long-term gain’. For starters, you will need to closely examine your existing business processes and tools, and make prioritized changes where justified.

For example you may need to enhance the functionality of your existing business software to achieve backorder cross docking or substitute part numbers. In some cases, now may be the ideal time for your company to select and implement new software in order to turn prospects and quotes into customers and orders, improve customer service, and reduce operational costs.
Similarly, reengineering your existing business processes may produce incremental benefits well in excess of the cost of the reengineering exercise. An assessment by a trained professional of the effectiveness of your current processes may reveal many opportunities for more control and efficiency at a lower operating cost.

While there’s no denying that these are indeed difficult and challenging times, those companies that take a proactive approach to improving their tools and business processes, with the help of outside professionals when required, will be able to ‘make lemonade from lemons’.