Is Your Supply Chain Ready for the Recovery?

I had several opportunities recently to hear from a variety of sources – an investment banker, the chief economist for the Chicago Federal Reserve, an owner of a software company, the president of an industrial distributor, and a leader of CEO peer groups – about their view of the economic recovery, and what it means for companies who manufacture and/or distribute products.

 

The consensus:  Most businesses are past their bottom and a slow recovery has started.

 

Banks are lending, although more carefully than before the crash, but that is probably a good thing.  Several of my clients agree that business for them has improved.  Many of my colleagues report on situations where production that had moved off-shore is returning.

 

What should your company be doing to make sure that its supply chain is ready for the recovery?

 

First – assess the status of your supply chain partners.  This obviously includes primary suppliers and customers, but go at least one step back in your process.  Your supplier’s suppliers may provide key material, components, or services that can impact your company’s readiness if there are any issues.  I have heard several reports lately where a factory in China that was one or two steps removed from the US marketer adversely affected production or the availability of pre-production samples.  From a purchasing perspective, now is a great time to make sure your key suppliers are ready to support you during the recovery.  But it is also a good time to assess your need for alternative sources.  Most companies are looking for new opportunities.

 

Second – review the recent performance metrics for your supply chain which should include total cost, customer service, quality, and inventory turnover.  What investments in people, training, facilities and equipment will position you to take full advantage of the recovery?  The reductions in headcount have put people with skills that you may need in the market.  And if you are not ready to hire, then look at adding to the skills of the people that have helped you survive the recession.

 

This is by no means a complete list.  There are many aspects of individual supply chains that provide additional opportunities, but what is most important is getting started and since we are not yet into 2010, I hope that you will consider these as first steps.

 

If anyone wants to share what your company is doing to prepare for recovery, I hope that you will comment.

Unilever leaves Chicago

It is a pleasure to join the group of bloggers for DC Velocity. As you can see from my biography, I spent the better part of 15 years working directly in consumer products for Alberto Culver, Helene Curtis and finally Unilever. I came back to the industry briefly in 2007 and 2008 with a start up venture, but that is a subject, perhaps, of a future discussion. All of my working experience is in supply chain although for the first few decades we had not used that term yet.

I will try and use the blog to raise subjects of interest to people whose companies range from the suppliers of the marketers, the consumer product marketers, and their customers. I look forward to hearing from my readers whenever the subject is of interest, or when there is a subject that you would like to address.

During November, there was an announcement by Unilever that the last piece of the consumer products business that was originally Helene Curtis here in Chicago is closing and that most of the jobs are moving east to New Jersey. Some of my former colleagues are still working there. For all of us this is the last chapter of a story that started with the buy out in 1996. Just today I drove by the site of the original Helene Curtis manufacturing facilities. Menard’s, CVS pharmacy, and Wal Mart each occupy part of the original property. Most of the jobs have stayed in the U.S., although with a company like Unilever, some functions are done elsewhere in the world.

During the same time frame Alberto Culver built a plant in Arkansas, so some of its manufacturing activity has left Chicago as well.

Those are just some Chicago-based examples of the long term trend of consolidation, out sourcing, re-locating, etc. that all companies are doing to survive and prosper going forward.

Perhaps some of you can share similar stories based on your experience. Do you see any other trends that the marketing and manufacturing companies should be thinking about for 2010 and beyond?