The Supply Chain Managers as Global Economist

In an interesting article in the September edition of Supply Chain Management Review, David Bowet from Norbridge, Inc. management consulting firm points out that in the troubling economic times, Supply Chain Managers must think more like a global economists.

According to Mr. Bowet:

1) Supply Chain Executives are uniquely positioned to take the lead in uncertain economic times

With plummeting dolllar, soaring fuel prices and slowing economy, 2008 feels like one of the most unsettled economic times in decades. Therefore, Supply Chain Managers need to understand well the economic forces in order to apply global economic logic to supply chain design and operation. Instead of merely reacting, Supply Chain Managers can champion change and use the broad economic trends as strategic advantage through differentiated services and performance.

2) Key supply chain actions to take under external economic pressures are in the areas of pricing, sourcing, making and moving

As the costs and rising and margins and squeezed, pricing strategies need to be reviewed, taking into account the total cost-to-serve in order to set the right offer. Sourcing strategies need to balance supply and demand by world regions, including sourcing closer to point of use and carefully select profitable off-shoring opportunities. Manufacturers should maximize plant utilization by downsizing production or increasing exports to growing markets, and locate the production facilities closer to markets in order to reduce the impact of rising fuel costs. Downshifting transport modes (eg. from road to rail), getting closer to customers with more DCs and creating more flexible distribution network are mentioned as methods of reducing overall freight costs.

3) In order to make change happen, supply chain managers needs an agenda and the right resources.

Based on the sound analysis of the situation and a wide range of alternatives, supply chain managers should built the pipeline of short- and long-term improvement initiatives, supported by acquiring the right tools. The supply chain organization should be integrated end-to-end, considering appointing a Chief Global Officer focusing on all key aspects of global management. Finally, innovative thinking in the organization should be stimulated, preferably by launching formal innovation programs.