The Supply Chain Growth of 2009!
2009 could be renamed “The Year of Supply Chain”. As the market gets tougher every dollar matters and the focus for companies becomes more on driving efficiencies throughout the Supply Chain.
Whether it is bringing together the best internal resources or using external consultants to drive process improvement quickly, companies will ultimately realize the dollar value attributed to these efficiencies – which in turn could help with surviving the difficult market conditions.
Some companies will also look at opportunities to outsource areas such as _warehousing and logistics to third parties (3PL), which may be one idea they should be wary of. The perception that outsourcing a current internal function like warehousing & logistics to quickly drive cost savings can, at times, be misunderstood. The initial start-up costs on such projects can be large and typical savings on outsourcing are mainly seen in years 4 to 10 – something executives need to be reminded of. The early financial value comes in the form of balance sheet improvements. True outsourcing value is derived from the providers specific knowledge, experience and high level of service capability which eventually drives the cost reductions and operational efficiencies.
In addition, the procurement arena is a huge area of focus when the market is in recession. After headcount, costs below the revenue line become the next point of focus for executives. They want cost savings delivered – fast! Strategic sourcing becomes a crucial function and if companies decide to go to market in the form of tenders , suppliers become concerned with losing business and, in turn, respond aggressively on pricing, allowing the procurement division to deliver some impressive cost savings. Again, bringing together internal resources or hiring short term consultants can be very effective.
The big question is: will companies react quickly enough? The more strategic and forward thinking firms will reap the rewards and those that refuse to make the investment will perhaps regret it.
John Clark
Client Relationship Manager/Practice Lead, Head2Head Supply Chain
Whether it is bringing together the best internal resources or using external consultants to drive process improvement quickly, companies will ultimately realize the dollar value attributed to these efficiencies – which in turn could help with surviving the difficult market conditions.
Some companies will also look at opportunities to outsource areas such as _warehousing and logistics to third parties (3PL), which may be one idea they should be wary of. The perception that outsourcing a current internal function like warehousing & logistics to quickly drive cost savings can, at times, be misunderstood. The initial start-up costs on such projects can be large and typical savings on outsourcing are mainly seen in years 4 to 10 – something executives need to be reminded of. The early financial value comes in the form of balance sheet improvements. True outsourcing value is derived from the providers specific knowledge, experience and high level of service capability which eventually drives the cost reductions and operational efficiencies.
In addition, the procurement arena is a huge area of focus when the market is in recession. After headcount, costs below the revenue line become the next point of focus for executives. They want cost savings delivered – fast! Strategic sourcing becomes a crucial function and if companies decide to go to market in the form of tenders , suppliers become concerned with losing business and, in turn, respond aggressively on pricing, allowing the procurement division to deliver some impressive cost savings. Again, bringing together internal resources or hiring short term consultants can be very effective.
The big question is: will companies react quickly enough? The more strategic and forward thinking firms will reap the rewards and those that refuse to make the investment will perhaps regret it.
John Clark
Client Relationship Manager/Practice Lead, Head2Head Supply Chain
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