Rethinking links in the supply chain

The two page article (downloadable here) reflects upon the current economic crisis and the authors views on the implications for SC Management.

Sohdi argues that at the moment the enterprise should focus more on how to improve revenues and improve profit margins as a whole instead of only trying to drive down cost. They list a couple of examples within the following categories on how this can be achieved.

• Lean and green
• Pricing & supply chains
• Shorten supply chains
• Reassess partnerships

On first sight shortening the supply chain seems to be the only strategic option from the SCRM perspective.

Shorter supply chains mean more agility, more robustness against disruption, lower exchange rate risk and, in the long run lower cost.

But if you look at this from a financial / company angle it becomes obvious that all measures mentioned are suitable to tackle the overall risk position of the company, by improving the revenue position a company can likewise (to some extend) hedge against the (at least financial) effects of supply chain risks.

From my experiences as a management consultant I can fully support the views expressed in the article. Companies tend to spend very much effort on the short term cost improvements (e.g. working capital management) and loose sight for the bigger problems like customer satisfaction.