When considering the global trade environment in 2009, there are a number of potential issues looming that can disrupt global supply chains, sourcing strategies and the flow of working capital. In times of economic downturn, leading companies will focus on restructuring supply-chain operations to better position themselves to grab additional market share and profits as global economies start down the path of recovery. A large part of supply-chain re-engineering efforts focuses on driving out inefficiencies while balancing risk. Supply-chain risk mitigation will receive increased focus this year, in comparison with past downturns, due to many factors:
-- As financial weakness permeates the marketplace, we already are seeing a rise in supplier bankruptcies. Companies will need to re-evaluate their supply chains to identify and support their key partners and reduce the number of potential weak-link suppliers. At the same time, multiple suppliers for a single product or part must be secured to ensure that supply chains keep running. Expect more dual or multisource procurement of raw materials, parts, subcomponents and assemblies to counter supplier financial risk, to develop sources closer to end markets, and to hedge currency swings and future inflationary pressures in different regions and economies.
-- Companies need to factor into their decisions potential fluctuations in future energy and commodity prices, as well as labor and currency exchange rates. Some industry sectors, such as industrial goods and construction, are likely to see robust price increases as major economies worldwide announce economic stimulus packages focusing on major infrastructure programs. Any resulting boom could produce another run of sharp increases in some commodities and energy.
-- Economic recoveries will likely be unpredictable and somewhat choppy across regions. The ability to react quickly to global shifts in demand will be critical for success. More redundant manufacturing capability should be established across multiple geographies in order to realize better time-to-market for end customers and to be able to balance and buffer demand globally.