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Supply Chain Industry Updates

Finding Lessons for 2020 from the Great Recession

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Hey, old-timer: We bet you thought you’d seen it all during the Great Recession of 2008-2009, right? After all, once-in-a-lifetime events are supposed to come around only, uh, once in a lifetime.

Right?

(We’ll pause here so you can enjoy a knowing little chuckle about the best laid plans of mice and supply chain professionals. You’ve earned it: Your career now has seen enough economy- and world-shaking events for at least two lifetimes!)

Luckily, we can learn from these events, however catastrophic, and use their lessons to help us manage through future disruptions. It turns out we can lay down some new plans and hopefully be better prepared for the next “once-in-a-lifetime” event. (The mice, however, are on their own.)

Along the same lines, the Association for Supply Chain Management (ASCM) recently updated a 2019 study — “Building Resilient Supply Chains: What Past Experiences Taught Us About Gaining Advantage in the Current Recession” — to identify lessons from more than a decade ago that can be applied to 2020.

“In the wake of the COVID-19 pandemic and the ensuing recession, supply chain organizations all over the globe are looking for solutions to the problems they’re facing in their businesses, from supply shock to risk management,” ASCM wrote in the updated report. “However, the lessons learned from the Great Recession of 2008-2009 confirm that there are steps supply chains can take to build resilience — through this recession and for the next one.”

ASCM helpfully summarized those steps as the “5 S’s”:

  1. Invest in scanning technology and capabilities to help you see what’s happening more than two-tiers deep into your supply chain. And, scan market activity for signs of impending disruptors.
  2. Be smart and invest in predictive analytics like AI. “A supply chain that learns from small disruptions can apply that knowledge and data to large disruptions,” ASCM noted.
  3. Strive to be scalable so you can match supply and demand.
  4. Be able to shift from one product to another as needs arise and circumstances change. A now-classic example from 2020 is fabric companies that made the shift to making PPE.
  5. Become economically sustainable. “Consider sourcing from local suppliers, stable economies and more mature sources, who are in turn more scalable and shiftable,” ASCM said.

The report said organizations that had taken steps such as these were able to sense the pandemic earlier (in November 2019 vs. February 2020) than less resilient companies and were able to return faster to baseline, too. A similar dynamic played out in 2008-2009.

Or, as summarized by lead study researcher Morgan Swink, Ph.D., executive director of the Center for Supply Chain Innovation at Texas Christian University’s Neeley School of Business: “Developing a more resilient supply chain puts money in the bank and makes the world a better place.”

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