SUPPLY CHAIN MANAGEMENT TO THE RESCUE

Last September, the collapse of Lehman Brothers triggered a severe economic crisis that has struck every corner of the globe. Bankers and the financial community are at the core of the current crisis, along with large complicities of governments and public institutions charged with managing financial issues of the nations. Moreover, the current crisis is propagating at the speed of light and knocking down effectively all parts of our business.

This fast spread is down to the fact that the crisis originated in the US, which remains the key player in international trade – being ranked the largest importing country and the fourth largest exporting country. With the US as the supply chain master, global planning and coordination is critical to fix the economic downturn.

While good global SCM is welcome regardless of what happens in the world, it becomes crucial in mitigating the global economic crisis. Serving customers worldwide efficiently, while minimizing resources such as working capital required and meanwhile lessening the burden on the environment is a worthy and significant goal at all times.

FOCUS AREAS
To recover the losses generated by the financial sector, efforts and reconfigurations must be made in the following areas of the real economy:

Supply Chain Flexibility
Under the volatile and dynamic business environment, flexibility and responsiveness of the supply chain have assumed paramount importance. Although worldwide demand is low at the current stage, it is expected to surge once the global economy recovers.

Organizations should manage uncertainty by matching supply anddemand without incurring larger cost or lower productivity. Hence,strategies such as supply chainreconfiguration and collaborativepartnerships should be sought toreduce cycle time with more effectivedecision-making and to adaptcapacity with no inventory or costpenalties.

Green Economy & Infrastructure
To propose a solution to the energy crisis as well as to spur a new cycle of demand, President Barack Obama has laid out a comprehensive plan to create a green economy and combat climate change through investment in new clean energy technology.

With the establishment of new national energy standards, the plan would provide incentives to replace the existing infrastructure with the next generation of constructions that are more energy-efficient and less-polluting. Indeed, energy, construction and automotive are the top sectors in terms of employment.

Thus, a coordinated stimulation is urgently required for the three sectors, with fairly clean technologies. Consequently, this will create jobs for the future and reinstate the confi dence in the global economy, which is sadly missing at the moment.

TAKING SCOR
It has been reported that Toyota, Honda, BMW and Hyundai are intensively investing in green car development and manufacturing. Nonetheless, global resources can be better utilized if joint R&D and mass-production can be wisely coordinated.

Facing a crisis at the macroeconomic level, it is feasible and advisable to adopt proven SCM (supply chain management) tools and best practices, such as the SCOR (Supply Chain Operations Reference) model for the organization’s ability to apprehend supply chain end-to-end with an integrated planning and lean management to improve global operations by reducing all waste vertically and horizontally along the supply network.

SCOR is structured around five core processes of Plan, Source, Make, Delivery, Return. It also emphasizes the enabling elements that are essential for the entire supply chain to function effectively and efficiently, such as appropriate business rules, business relationships and technologies.

Revisiting the issue on green car development, joint R&D can be initiated among several automakers to allocate R&D and manufacturing resources to certain companies, while research outcomes could be shared within the industry.

With better integration of suppliers and customers, this plan aims to achieve balanced end-to-end supply chain activities, globally optimized resource allocation, and higher productivity and efficiency, which will eventually help minimize total supply chain cost and maximize profit.