19 March 2009 | Martha McKenzie-Minifie
Companies are being advised to reduce the complexity of their supply chains in the downturn in a report published today by the Management Consultancies Association (MCA).
In its report, The Weakest Link: How supply chains can make or break business in the downturn, the MCA said globalisation has resulted in supply chains which are much more complex than they were a decade ago. Although long lines of delivery were "fine in good times", they could leave companies exposed when economic fortunes turned: "Especially if exchange rate movements or inflation around the world erode price advantages."
MCA advice included urging companies to:
• reduce the complexity of supply chains
• identify and focus on profitable lines of business
• collaborate with key suppliers to reduce costs and improve product availability
• ensure that all processes are 'agile' and can be adapted to meet rapid changes in demand.
"As the downturn continues, supply chain vulnerability will be one of the highest risks organisations face," said Nigel Issa, an associate partner at Atos Consulting and author of Ten steps to reduce supply chain risk.
When asked which issues were having an impact on clients' supply chains, 65 per cent of members cited 'falling customer spending'. This was followed by 'the need to conserve cash' (53 per cent), 'difficulty in producing accurate forecasts" (40 per cent), 'volatility of commodity prices' (35 per cent) and 'tightening credit' (30 per cent).