The supply chain, while not directly impacted by the daily shifts in the DOW, must adapt to pressures created by fluctuations driven by this data. In a blog post published by Arkieva they noted that supply chain operations will battle smaller top lines, reduced bottom lines and less cash/ more costs. While these challenges may seem daunting for even the biggest and most efficient supply chain there are many opportunities for operational improvement during an economic downturn. One opportunity for SCM improvement that spans across the entire supply chain is the implementation of industry best practices. These methods have proven successful in improving overall efficiency and productivity. Another opportunity for supply chain improvement is the implementation of supply chain software to create a flexible, scalable supply chain. Many operators make the mistake of drastically cutting staff, working hours or facilities and this often creates more problems in the long term. Utilizing ERP or WMS software allows SCM businesses to quickly and easily scale operations to save capital without cutting physical assets or critical staff. Controlling cost to serve while keeping in mind the importance of maintaining customer and partner relationships is also a strong opportunity for cost savings during lagging economic times. It is cheaper to maintain these existing relationships than find and develop new ones so it is critical to keep lines of communication open and expectations clear. Many supply chains also reconsider their commodity management strategies during times of stress and often choose to reduce on-hand inventories to minimize holding costs. This is an effective strategy if well managed to prevent out-of-stock scenarios. Lastly, preparing for the inevitable economic rebound is vital. Focus on strategic hiring and employee retention efforts and invest in both long term and short term projects. Do not be short-sighted and consider only the short term repercussions of your supply chain strategies. To learn more about these supply chain strategies contact Datex experts today at marketing@datexcorp.com or 800.933.2839 ext 243.

1. OPPORTUNITIES FOR THE
SUPPLY CHAIN DURING AN
ECONOMIC DOWNTURN
B Y : A N G E L A C A R V E R

2. The Supply Chain & the Economy
In a blog published by Arkieva their experts noted that:
“If you are a retailer, manufacturer, or distributor, the day-to-day moves in
the Dow neither drive nor necessarily reflect the day-to-day operations of
your business.”
What this does mean is that your business must adapt to the pressures
created by fluctuations driven by this data. The blog post goes on to
note that businesses will encounter:
– Smaller top lines
– Reduced bottom lines
– Less cash and more costs

3. Focus on Supply Chain Management
Best Practices
One strategy top performing supply chain operations are implementing
is a strong focus on industry best practices. These tried and true
practices have proven successful in effectively managing operating
expenses while improving facility productivity and efficiency.
Some operational areas where SCM best practices are most useful
include:
– Picking
– Putaway
– Staging/Loading
– Crossdocking
– Kitting & Assembly

4. Create a Flexible Supply Chain
Many supply chains make the mistake of scaling their operation by
cutting a large amount of staff, reducing working hours or closing
satellite facilities when the economy shows signs of slowing down. This
often creates more issues than it solves as the customer relationship
often suffers.
Successful supply chain operators have turned to technology partners
such as ERP and WMS providers to help develop a flexible supply chain
in order to scale up or down quickly and easily without cutting physical
assets or critical staff.

5. Create a Flexible Supply Chain
Workflow based supply chain software allows operations managers to
easily change business processes and capabilities based on a variety of
criteria.
This flexibility and adaptability not only helps to retain current
customers, but capture new markets even in a down economy. This is
due to the ability continue nurturing the customer relationship rather
than focus solely on cost.

6. Control Cost-to-Serve
According to a study published by AMR Research only 3% of supply
chains make decisions based on the cost to serve. Looking at the supply
chain as a whole rather than as a sum of its parts creates many dead
zones for profitability.

7. Control Cost-to-Serve
The graphic in the previous slide depicts what functional areas are most
often evaluated when searching for cost savings opportunities. All of
these supply chain functions should go into a cost-to-serve analysis.
Once this analysis has been completed it is easier to identify which
customers are your most profitable and which need further evaluation.
As these “trouble” accounts are identified and inefficient cost categories
located, cost saving processes can begin.
This analysis will be beneficial for both your team and your customer as
any opportunity for cost savings is appreciated during lagging economic
times.

8. Focus on Customer Service
While reducing cost to serve is a critical focus of many supply chain
operators during an economic downturn it is critical to remember that
cost reduction efforts cannot negatively impact the level of service
provided to customers.
Keeping existing customers is much less costly than onboarding new
ones.
Keep lines of communication open. Ask customers what you can do to
help them during the tough times and show your willingness and ability
to support their needs.

9. Evaluate Partner Relationships
Your partners play a large role in your business at every level in the
supply chain – upstream as suppliers and downstream as shippers.
They also represent a large area of expense and therefore are often an
area where significant savings is available.
In a time where every dollar counts it is critical to evaluate your
relationship with your partners, their performance, their stability and
how they affect your bottom line. APICS identified three areas of your
partners’ operation that should be regularly evaluated:
– Strategic
– Operational
– Financial

10. Evaluate Partner Relationships
Source: http://www.apics-northshore.org/pdm/presentations/AMR-%20APICS_NorthShore3-10-09.pdf

11. Retain & Maintain Supplier Relationships
Many supply chain operators think the best option is to drastically
reduce order volume or temporarily discontinue the supplier relationship
during an economic downturn, but when demand begins to increase
again, this puts strain on your suppliers and they are often unable to
meet this new level of demand.
Maintaining these relationships even through tough times helps both
teams to adjust to varying supply and demand levels. Keep lines of
communication open and ensure that both groups continue to benefit
from the business relationship.

12. Adjust Commodity Management
Practices
In many supply chains on-hand inventory represents a significant dollar
value in relation to physical assets. During economic downturns these
businesses often choose to reduce inventory levels and the associated
holding costs. This is a simple solution as shopper demand often
decreases during times of recession and high on-hand inventory levels
are unnecessary.
While these efforts are often successful it is critical to remember not to
reduce inventory to the point where out-of-stocks begin occurring. This
will negatively impact customer relationships and your bottom line.

13. Prepare for the Rebound
No economic slump will last forever so it is critical to prepare your
supply chain for the inevitable rebound. Two main strategies successful
supply chain operators implement are:
– Strategic hiring and employee retention
– Invest in projects for the long-term rather than short-term

14. Conclusion
While manufacturers, retailers and distributors are not directly impacted
by incremental changes of the DOW they must be conscious of how
these fluctuations affect customers and therefore their operation.
During times of economic hardship there are many opportunities to
improve the efficiency and effectiveness of the supply chain while also
reducing costs.
It is critical to remember that any changes made should benefit the
business in both the long-term and short-term as the economy is always
expected to rebound.
http://www.apics-northshore.org/pdm/presentations/AMR-%20APICS_NorthShore3-10-09.pdf
http://www.supplychainquarterly.com/topics/Strategy/scq201003health/
https://blog.arkieva.com/supply-chain-planning-and-an-uncertain-economy/

15. Keep Up to Date on Supply Chain Issues
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