UnitedLog asked Logipi to interview supply chain thought leaders from around the world to hear their views on how the recession has impacted supply chain management. They asked 4 questions to these supply chain professionals, the following is a summary of one of these questions:

 What will we be "missing"? Are there things we will need to learn to live without?

Inventory

David Ryan, along with Cheryl Berklich, Pedro Rodriguez, and Mike Star, strongly feel that the false comfort of inventory is the number one thing that we will have to learn to live without. We need to learn to live without the luxury of procrastination and deciding when we will become more competitive. An economic cycle—particularly when it’s a downturn—forces procrastination out of the way. In addition, we are dealing with the convergent forces of technology innovation and demand for market leaders, and those things have changed again. So, the complacency, the procrastination, the solving problems through carrying more inventory, that’s what we need to live without, and those are the things we have to change.  Mike Star also thinks we will need to learn to live without fixed assets by shifting to variable costs. Buffer stock will also go away and companies will need to turn towards supply chain partners to provide the supply chain innovation since big capital outlays and expenditures will continue to be scrutinized.

Credit

Many like Cheryl Berklich agree that we are missing access to easy lines of credit, or current lines of credit.  Pedro Rodriguez says many companies do not have the financial power to actually finance their own inventory. A lot of companies are trying to provide the same service levels to the customers with a lot less inventory than before, and that presents a challenge, since many companies have not placed a lot of effort on tactical planning.  Chris Russell goes on to say that the vast pool of free money and government support won’t be back for a while, if ever, but surely, that’s a crutch for poor innovators as well. Some institutional trust has been lost. The system can’t be illegally rigged for the benefit of a few.  Cheryl continues to say there always will be opportunities for venture capital, cash infusions, etc. Yet when it comes to strict credit, we may see it come back, but there will be far greater restrictions on how deeply companies are leveraged.

Less SKUs

Mike Star says manufacturers will look at rationalizing their SKUs and sell more standardized products. John Charnovich agrees with Mike Star that people are less interested in having more options now. If you have one basic product or service that satisfies what your need, that’s going to be acceptable moving forward. People are moving back more toward basics. We can make supply chains less complex if we reduce the number of SKUs and the number of brands and the number of things around a certain product category.

Quality Over Quantity in Innovation

Atif Moin believes we will be missing the more relaxed business climate where you could just give a 3PL a call to initiate a deal. Now everything needs to be done through a contract. Everything needs to be secured, everything needs to be signed off before starting or initiating a deal.  Pavan Vyas says that in the IT sector, the rigor focused on innovation has been accentuated by this recession. Over the short to medium term, product and service innovation processes are likely to be subject to a lot more rigor. We may have to contend with a lesser number of innovative products hitting the market, but we can be sure that the ones that will make it there will definitely be worthwhile.

As Cheryl Berklich points out, smaller companies that don’t have R&D budgets are looking more to people to resolve their problems in terms of innovation. While some organizations are really focusing on innovative ways to manage technology, the smaller companies don’t have enough access to cash to really manage that, so they have to look to their staff to be more creative. 
 

Read on > Are there ways of working that need to be changed, either as a direct effect of the 
                   economic downfallor more as to help avoid dire consequences in the future? >
 

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