Analysis update
Supply chains hold
the future for everyone
During challenging economic conditions, there will be just one mantra for
CEOs and their Boards: ‘manage for cash’, write Alan Braithwaite and
Martin Christopher, LCP Consulting.
ompanies may use a variety of Their aim is to take inventory out and pay geography, and intrinsically more vulnerable
C
terms to express this, talking later to release cash, while at the same to invisible hazards, such as unexpected
about ‘tied up capital’ and time protecting margins by avoiding bankruptcy, capacity withdrawal, changes
‘freeing up cash flow’. But the obsolescence and write offs. in service terms and regulatory change.
focus is, quite simply, getting
and keeping as much cash as possible. For Suppliers are seeing an accentuated decline These challenging conditions do not stop
many companies, the extent to which they in volumes, as their customers de-stock, with the downturn and underlying risks: the
can do this – even their survival over the and reduced manufacturing and supply recovery phase may be equally traumatic.
next 18 months – lies in how well they efficiencies as batch cycles shrink. They As production and distribution capacity
manage their assets in the supply chain. are having to wait longer to get paid and exits the market in response to poor
And this will be harder than ever. often cannot pass that pain on since conditions, there will be shortages during
Customers are demanding faster delivery smaller suppliers, on which they are the upturn which may be exploited through
in smaller lots with extended credit terms. dependent, may simply stop trading. At rapidly rising prices. Inflation may be linked
the same time, with growth causing interest rates to rise
commercial risk and curtailing the recovery. We believe that
levels have how organisations manage their supply
increased as chains will be a critical success factor in
supply chains have their survival and success in the next few
become globally years. In the long run this micro-economic
sourced, extended performance will make all the difference at
in time and the national level. >>
Alan Braithwaite and Martin Christopher: “We believe that how
organisations manage their supply chains will be a critical
success factor in their survival and success in the next few
years. In the long run this micro-economic performance will
make all the difference at the national level.”
46
MANUFACTURING
&LOGISTICSIT December 2009
www.logisticsit.com
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