Driven to Shrink?

April 1, 2001
Driven to Shrink Driven to Shrink? The dramatic rises and falls in e-commerce performance are driving supply chain execs to psychiatrists and psychologists.

Driven to Shrink?

The dramatic rises and falls in e-commerce performance are driving supply chain execs to psychiatrists and psychologists. According to a Washington Times report, www.whiplash is causing managers to seek professional help to deal with the depression of falling from the high expectations inspired by early e-profits.

Federal Reserve Chairman Alan Greenspan’s periodic reluctance to cut interest rates hasn’t helped these bruised psyches. But Greenspan understands what keeps supply chains flowing. Be of good cheer because the long-term outlook remains bright, says Greenspan. He observed recently that businesses continue to invest heavily in the technology that helps them identify quickly, and respond to, marketplace trends — and to improve their productivity.

This optimism filtered into an interview I had recently with Wayne Kiser, senior project manager at Sedlak Management Consultants. He told me that companies have more resources than ever to keep them agile enough to respond to sudden market changes.

"Our clients are paying a lot more attention to the visibility their suppliers have of the inventory situation," he said. "We’re seeing more third-party service providers becoming part of their customers’ supply chains. They don’t have the high overhead costs of traditional manufacturers and they offer supplemental capacity. If you can link up with someone who has that capacity, or can put it in place in a very short time, you have a strategic advantage there. Depending on how flexible or nimble you are, you can turn that on and off like a faucet."

This capacity, along with the improved information sharing technologies that contribute to strategic planning, are shortening supply chains. This adds to their agility and helps improve bottom-line performance. The high-tech computer market is a good example. Sedlak is working with clients in the Internet infrastructure who make servers and are into optical networking. They configure mid- to high-end server systems. These servers aren’t sitting on shelves somewhere. They’d be obsolete in three months. They’re assembled to order, relying on a supply chain that will deliver the necessary components in time to configure the server, load the software, test it and ship it to the customer.

Even the industrial robot market is participating in this feast of flexibility. According to the United Nations Economic Commission for Europe (UN/ECE) and the International Federation of Robotics, robot prices are falling while their speed, accuracy, versatility and computer power are on the rise. The corresponding rise in labor costs is adding to the robot’s allure in industries outside automotive.

"The food industry and many non-manufacturing sectors ... are significantly stepping up their investment in robot systems," notes Jan Karlsson of the UN/ECE.

The rising availability and quality of such managerial and technological resources should make it easier for you to ensure supply chain flow, even in turbulent times. That’s good news for you ...

... but depressing news for the shrinks.

-- by Tom Andel, chief editor

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