It was late November 2008. Factories were idle, demand was uncertain, and supply chain leaders were navigating new waters in uncertain times. I met with economists, strategists and operating officers to discuss which letter of the alphabet (L, U, V, or W) best described the recession. However, the burning question, and the one that they REALLY wanted answered to know was “how do I best manage my supply chain through the upturn of the recession?” Their focus was intense because companies make the most $$$ in the upturn.
During this dark period, I was meeting with executives two to three times a week. This continued for three months. It was draining. Shuttered factories and exploding inventories drove companies –business executives that had never experienced working capital issues–to their banks to beg for capital.
The supply chain quickly escalated to the boardroom. There was no doubt that it mattered; but the layoffs, closed factories and working capital issues highlighted a new importance to company survival.
In this critical time, it became clear, real fast, when a company’s supply chains was off track. Putting it back on course took longer. It took most companies five months (October 1998 to April 1999) to put their supply chain back on course. It was a scramble to sense and re-establish demand patterns, to change product portfolios, and redesign supply networks. Today, most companies are beginning to manage the upturn.
Cisco did it best. They accurately sensed the downturn in the first month and within weeks translated true demand to their extended supply chain. Yesterday, John Chambers, Cisco’s Chief Executive Officer reported that the company has entered “its next phase of the recovery.” The Company posted a 23% jump in quarterly profit and an 8% gain in revenue. It is one the most robust quarters’ in Chambers career. It signals an up-turn in high-tech buying.
While companies crashed and burned declaring bankruptcy if they mis-managed the downturn, the management of the upturn is critical to maintaining market share and fueling growth. It will redefine leaders. In the next year, we will see new case studies of supply chain leadership début on Wall Street. The current cliché stories of collaboration will become obsolete. Instead, it will be about sensing demand, hard work to drive alignment and a return to supply chain basics.
Let me know if you see great stories of clients using supply chain excellence to be the bridge over troubled waters in the recession.
Until then, I will be the Supply Chain Shaman scouring the earth to find new solutions to help you drive supply chain excellence.