Wednesday, January 21, 2009

STRATEGICALLY MANAGING SUPPLY CHAIN RISK IN UNCERTAIN TIMES.

Introduction
The last 12 months has seen unprecedented changes in the global economy never before witnessed in the modern era. For the first time in decades some of the best managed companies are under severe pressure on bottom-line results. According to UN annual economic report, 2009 world output will reach a meagre 1 per cent in 2009, compared to 2.5 per cent in 2008 and global growth rates of between 3.5 and 4 per cent in the preceding four years. The 2009 projection includes a decline in output of 0.5 per cent in developed countries, along with growth of 5.3 per cent in the transition economies and 4.6 per cent in the developing world. Falling interest rates and crude prices, various economic stimulus packages in some of the major developing and developed economies, will bring some relief to the embattled global economy. Nonetheless, overall conditions for various businesses will remain tough and uncertain in the immediate to medium term. Notable industries that will be severely impacted include but not limited to Mining and Resources, Petro-chemicals, Maritime, Road and Aero logistics, Property, Automotive, Pharmaceuticals & Life sciences* Beverages*, Retail, Electronic, Furniture, luxury goods, Building and Construction, Recruitment, Travel and Tourism etc
Managing in Uncertain TimesVarious local and international companies and their associated supply chain partners will unquestionably be confronted with numerous challenges and risks that need to be carefully managed. Already we are witnessing the distress among local and global household names; Inchape, APL, Schenker, Woolworth, Wincanton, JCB, Marks and Spencer, Waterstones Mercedes Benz, Sony, Chrysler, Alcoa, SAA, Dell, Kodak, SuperGroup, Citigroup, HBOS, KLM, Thompsons Travel, Maersk, HP, EDF, Nissan, Samsung, Toyota, MSC, Wedgewood, GM, Imperial Group, BHP, Tata, Anglo American, TDK, Merck, Adams, Ryder logistics to name but a few.
Unquestionably, a number of these companies will survive whilst others will disappear off the business landscape!

Implications for Ghana and other West African Economies
For now, Ghana and other West African economies seem to have escaped to have to pump money into its relatively small banking and financial service sector. Unfortunately prices for the region’s key minerals and commodities (coal, manganese, iron ore, oil, cocoa, copper, platinum gold, gemstones, coffee, bauxite, diamonds etc), have considerably fallen in line with global demand. Reduction in requirements from the both developed and developing world will impact projected GDP growth which will in turn influence various commitments vis-à-vis public expenditure, job creation, infrastructure upgrades and developments.
Ghana and other West African Company Executives must strategically manage their supply chain risks
To lessen the potential impact of the global economic meltdown on the organization, forward thinking company executives must seriously consider using various supply chain strategy tools and re-engineering techniques to:-
1. Ensure Convergence of business strategy and supply chain management vis-à-vis continuity in retaining and winning customers in targeted markets.
2. Improve internal operations and productivity
3. Have a good handle and control of cash flows
4. Minimize exposure to capital tied up in inventories along the value chain
5. Minimize business risk and exposure through smart and value driven strategic alliances and partnerships
6. Co-source and outsource operations and products.
7. Hang onto strategic human capital
8. Acquire strategic assets to complement existing business
9. Dispose of non-core assets
10. Seek to capitalize on the changing needs of the market and its customers
Conclusion
Undoubtedly, the world economy will emerge from this crisis with a transformed business landscape and modus operandi.
For the cautious but visionary and calculated risk taking Chief Executive, this may be the time to revisit business fundamentals to ensure the
1. Possibility of profiting from emerging opportunities emanating from the crisis
2. Re examination of the core principles of the organizations supply and value chain strategy
3. Readiness for the potential upswing within the next thirty six months!

The Q&A Executive insight™© series, is a publication that hopes to disseminate via leading edge periodicals, simple but strategically relevant business viewpoints to industry Executives and Business Leaders.
Dr Boateng is a FELLOW of the (a) Institute of Directors (UK& Southern Africa), (b)Chartered Institute of Logistics and Transport (UK) c)Chartered Management Institute (UK).
Should you wish to comment on the Q&A Executive insight™©series, please send an email to info@panavest.com or dboateng@panavest.com.

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