Gaining a Supply Chain Edge

The Great Comeback, Part 8: Comeback Expectations

As I write more about the Great Comeback as the time and place to progress to after the end of the Great Recession, it’s time to take a step back and ask ourselves, what are our expectations here?

That’s a tough question. None of us can say with certainty what the next several months will hold for our businesses. You could argue that this statement is always true. However, with so many industries affected by the difficulties in the economic downturn of this year, certainty about anything seems like a luxury. What I encourage you to do is to think about your plan, which is what I’ve been helping you outline in this latest series of blog posts.

To set expectations, you should understand the full ramifications of the recovery of your company after the Great Recession. Click the links below for information to help figure out expectations:

Global Economy, Domestic Economy and Business Cycles

Consumers and Investors

Government Involvement

Competition

As there are different scenarios for each of the above factors, likewise, there may be different scenarios of your comeback from the recession. In addition to the considerations outlined above, you should perform sensitivity analysis on the different Comeback scenarios.

Moving on with your plan, let’s think about the comeback expectations you have in terms of turning points and lead times.

A Complex Subject: Turning Points and Comeback Lead Times

To define your Comeback expectations, answer the following questions for each business sector within your company:

1. When are the turning points?

2. What is your comeback lead time and future volumes?

To fully appreciate the complexity of turning points, comeback lead times and future volumes, consider the automotive industry.

The "bottom" for car sales will be 2009, but recovery will take several years. However, there is a Volkswagen plant in Germany that is running 24x7 producing small cars. This plant is running at full production, and still, Volkswagen has to turn small car customers away.

Overall, Volkswagen has available capacity. But specifically in the small car division, they have no available capacity for demand. This makes the answers to the questions about turning point, lead time and future volumes very complex.

It is only by understanding an organization’s divisions, and the interdependence of some of these divisions (e.g., when a customer buys a small car, they will not buy a large car; or when a consumer eats out more often, they cook less at home), that the turning points, the comeback lead times, and the future volumes can be plotted.

Depending on the process being considered and the flexibility and the modularity of this process, combining the division’s turning points to understand the overall organization’s capacity may be realistic (or, it actually may not be realistic). For example: The flexibility of an automotive assembly plant that is tooled to assemble small cars has little ability to address large car assembly.

On the other hand, a consumer food production operation often has the flexibility to be converted to an institutional pack of the same or similar products. Other processes (for example, Transportation Management Systems) can often be used across different divisions, so the applications across the organizations are typically very relevant.

The deliverable from this third step in developing your Comeback Plan (see the complete list of steps here is a clear understanding of what volumes of products you will sell from this point forward. This forecast should be presented as a series of Comeback scenarios, keeping in mind the divisional operations that will be affected.

In the next blog post, I will be looking more at analysis of your internal organization and what a review of that will mean for your comeback plan.

Jim

Tompkins Associates

TAGS: Supply Chain
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