Management in the period of faltering economy

(VLR) As the economy is sluggish and faltering, businesses have to face with challenges and then try to confront them with various solutions. One of the important things is to ensure frequent activities in every process, among which operation process plays a strategic role. How businesses’ supply chains to be managed to ensure stable and synchronous operations, to avoid risks, to reduce cost and to enable to overcome crisis should be a thing to be paid attention to.


As the economy is sluggish and faltering, businesses have to face with challenges and then try to confront them with various solutions. One of the important things is to ensure frequent activities in every process, among which operation process plays a strategic role. How businesses’ supply chains to be managed to ensure stable and synchronous operations, to avoid risks, to reduce cost and to enable to overcome crisis should be a thing to be paid attention to.

And it depends on fields of operations, characteristics, and sizes…businesses will find their own suitable solutions. However, the following matters should be paid attention to:

A SUITABLE SUPPLY CHAIN STRATEGY SHOULD BE CONSIDERED

In business scope, the first thing should be considered is a strategy for supply chains. A supply chain should be maintained or adjusted to support a business, both in time of crisis and after. Besides, businesses should have solutions for risk controls to reach a balanced status of potential profit for all sides in a supply chain. They include determining basic strategies for supplying the market, cooperating with other businesses and applying suitable strategies.

Normally, there are two main ways to adjust strategies for placing an effective supply chain: first, shortening a supply chain to reduce turnaround time and prevent risks that are able to break it – although it limits the good use of economic advantages to expand the supply chain, the strategy does help business operate effectively in difficult situations; second, optimizing sources and positions of supply chains to reach the flexibility through diversities, which is suitable to businesses whose target is to bring their supply chains deep into the new markets.

In general, supply chains of businesses should be well designed to deal with the shortage of goods, rising price and speculation effectively – the “features” of the period of faltering economy. Administrators should consider either to re-allocate activities to approach big customers or to focus on local markets instead of foreign ones. These matters should be considered when finding optimizing solutions for businesses, together with co-operations from other departments: operation, finance, sales and marketing…

INSIDE: FOCUS ON SYNCHRONIZATION

Effective supply chain management creates huge impacts to cash flow and customer services. In severe market condition, it would help businesses to gain competition advantages.

The secret is a tighter synchronization which helps businesses to react faster to changes from outside environments or to have better flexibility to “survive” the crisis and then have certain advantages when the economy bounds back.

Modeling and optimizing inventory in every segment of a supply chain is a good solution. The modeling of a possibility of late supply will help a business to adjust its inventory better. To do that, it is necessary to have a product data network for transparency in a lengthened supply chain. When inventory can be monitored from an order position to a distribution center, or from customers, the warehouse now becomes a safety one for businesses.

Another important target is to reduce amount of cash as expense for inventory. It can be achieve by exchanging diagonal functions to synchronize processes of purchasing raw materials, allocating them to suitable sectors and transporting products to customers. There are many ways to boost information channels of administrator-level and other departments’, by the use of computerized data administration network. However, in period of crisis, senior administrators should meet other departments in person to be timely informed and then to adjust the synchronization.

OUTSIDE: BUIDING A SAFETY BRIDGE

To determine who will be long-term suppliers or long-term partners is of extremely importance. Similarly, analyzing existing relationships to determine if they are still effective and helpful in new situations is also an urgent requirement. Diversifying sources to minimize risk of a supply chain collapse is also a matter that should be considered. Businesses should have contingency plans by choosing more suppliers, but it is not necessary to have them supply a big amount.

By building a tight relationship between customers and suppliers, businesses can have clear understanding about the instability – a feature of markets in the time of crisis. And for a trusted connection, they should establish a communication channel among companies, customers and suppliers. The “bridge” can be used to share information about issues as the need for cost cutting, using alternative materials when the price increases… A business can work with suppliers for contingency plans for unexpected issues.

In addition, it is necessary to guard against and have alternative plans for customers’ or suppliers’ bankruptcy for it can affect the chain and make the supply chain collapsed. A business can play a role of a “diplomatic representative” to help customers or suppliers in trouble. Moreover, it can help its staff to make an assisting plan, which makes the business itself to be a good-will customer or supplier. Or, it is necessary to decide which supplier should be gotten rid of.

Certainly, there should be a change in mindset and behaviors or administrators and business’s staff to have a successful inside synchronization and outside bridges. And there should be a good will and participation from the highest level of administration to create a strong attachment among departments themselves or among departments and partners. In addition, a business should enhance the all-level co-operations: among staff of supplying department, production, sales and R&D. And given training courses can help to enhance knowledge and understanding of all members to the business value chain.

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