Recession highlights need for a 'flexible supply chain strategy'

Apple has been ranked number one in AMR's 'Supply Chain Top 25 for 2009'. The supply chain research firm scored the top 25 on inventory, return on assets calculations and revenue growth forecasts over a three-year period.

Tim Lawrence, supply chain expert at PA Consulting Group, comments: "As the recession deepens, supply chain directors face a dilemma. Declining volumes, revenues and profitability are seen to mandate supply chain retrenchment, shedding capacity to reduce cost and consolidating the supply base to maintain price leverage.

"However, reducing supply chain capacity may reduce flexibility to respond to customer needs. Consolidating the supply base will increase dependence upon a small number of potentially vulnerable suppliers risking disruption to customer service."

"In contrast," says Tim Lawrence, "companies that put the customer at the centre of their supply chain will survive and thrive during the downturn. Chief Supply Chain Officers need to plan a flexible supply chain strategy which will win customers at the point of sale or use. They should design the upstream supply chain backwards from this point, retaining greatest capability at least cost through outsourcing arrangements, diversification for surplus capacity and supplier development programmes to protect the supply base."

To learn how PA can help you plan a flexible supply chain strategy, contact us now.