Agile supply chains are better able to match supply to demand in environments when demand is growing quickly, or as in the current situation, when it may fall quickly.
One of the worst things a company can do when the world is tipping into a recession is to react too slowly. The key process for matching supply to demand is the sales & operations planning process. But if companies are using order history to forecast demand, they will be stuck with too much inventory. Demand driven companies, companies that have visibility to demand at the point of sale , can sense downturns in demand much, much quicker.
Daily IBP is beyond what many companies can do. But at an inflection point like this, some sort of daily planning is imperative. When demand actually begins to falter significantly, a company must be prepared to respond. After one recession, I talked to one company that had implemented daily inventory planning meetings. The company told all of its suppliers to stop all shipments for four weeks until it had a chance to recalibrate its demand plan.
In a recession, manufacturers have to be careful about the impact of slowing down payments to key suppliers. If you slow down how fast you pay them, their financial integrity may be impacted. Many global supply chains rely on Chinese suppliers and contract manufacturers. China's industrial output slumped 4.8% in July, for its’ weakest reading in 17 years. Paying small suppliers more slowly in at risk economies could tip them out of business.
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