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Downturn Exacerbated by Bad Information in Supply Chain

May 19, 2009

As the recession rolls on and the focus turns to recovery, an article at points out that maybe things didn't have to be as bad as they were. Lack of clarity in the supply chain has resulted in supply problems at many levels.

In fact, many companies cut dramatically due to uncertainty in demand when the market slowed; as a result, some cut more than they needed to. In some cases, shipments of goods were decreased more than demand had contracted. Whether production can catch back up when demand rebounds is one question some experts are asking.
Bad information or lack of information can lead to decisions that may not be the best for your company, especially with the focus on lean that has become so prominent in recent years. The comments spawned from the article show how much misunderstanding still exists, and how in times like this, that lack of understanding can be devastating.
As one commenter wrote: To be successful with Just In Time/Lean, you have to solve the problems that inventory always covered up: defective materials ("scrap it, get another one"); late deliveries; poor production planning." In a recent interview, Dr. Perry Daneshgari told me that now is the perfect time to evaluate those issues because "waste shows up right away when you don't have as many orders coming in."
Fixing your own problems, and clarifying your needs and those of your customers can go a long way towards fixing the problem addressed in the article: lack of clarity creating a bigger problem than expected in an uncertain economy.
Related from MDM
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Commentary: Channel Conflict Appears When Visibility Disappears
Changing Channels, Part 2 - Conflicts blur line of sight to end-user

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