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"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."

Tim Lawrence, PA supply chain expert

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.

While Apple performed well, there is a view the recession has made it increasingly difficult for most firms to rely on supply and demand predictions beyond three months.

AMR concluded: "Foresight pays dividends, with greater supply chain agility enabling survivors to knock off competitors for good, and deliver huge earnings in the climb out."

Meanwhile, the magazine 'Supply Chain Standard' looked at the benefits of having a flexible supply chain. It explained that being able to maintain cost-effective delivery in times of large and unscheduled demand fluctuations is more critical than it was six months ago.

Options firms could explore include reducing the risk from suppliers. There have been reports of companies having to help their contractors ensure they make deliveries, while others are using tools to spot threatened suppliers earlier on.

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.

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Tim Lawrence
Manufacturing consulting
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