The 2020 Mid-Year Economic Update_long

‘Supply Chain Optimization’ to Take Center Stage in 2010

ISM semiannual survey indicates many manufacturers expect to continue supplier consolidation.

“Supply chain optimization” will take center stage for many purchasing and supply chain executives going into the next year, according to the ISM December 2009 Semiannual Economic Forecast released this week. (Hear Adam Fein’s 2010 Economic Forecast for Wholesale Distribution.)

In response to a question, 71% of respondents in manufacturing and 62% of non-manufacturing respondents plan to take new steps in 2010 to improve supply chain management practices.

Favored approaches for manufacturers include:

  • Supplier consolidation
  • New or improved enterprise technology and system utilization
  • Improved inventory/asset management (Read about Vendor Managed Inventory in the Nov. 25 issue of MDM Premium).
  • Lean manufacturing
  • Cost reduction

For non-manufacturers, the five most frequently cited approaches were:

  • Strategic sourcing
  • Product rationalization/demand management
  • Supplier consolidation
  • Improved inventory/asset management
  • Spend analysis/consolidation

Overall, expectations for 2010 are for positive conditions in the second half of 2009 to continue in manufacturing, while the non-manufacturing sector will see marginal growth, according to the ISM December 2009 Semiannual Economic Forecast. (A full report on the semiannual economic forecast from ISM will appear in the Dec. 25 issue of MDM Premium.)

The manufacturing sector overall is positive about prospects in 2010 with revenues expected to increase in 13 of 18 industries, while the non-manufacturing sector appears slightly less positive about the year ahead with 8 of 18 industries expecting higher revenues. Business investment, a major driver in the U.S. economy, will decline as both sectors expect a combined average of a 5.4 percent decline in capital spending.

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