Recession and Supply Chain Innovation

Current economic recession had impact on almost everything and innovation is supply chain was not something that was insulated from this. Innovation in Supply chain also has been impacted by this recession and it did in 2 ways in my view, I would say - one is negative that due to the cost reduction measures, the Supply Chain Strategies that needed sizeable investments in both technology or otherwise, were put on hold and we know that these strategies are normally the breeding grounds of innovation in the organizations; and the other factor that in-fact is a positive one in terms of its impact especially on innovation in supply chain management – this is the continued outsourcing push from organizations due to recessionary cost reduction pressures.

Few days back I had a discussion with Dustin Mattison, Founder of Logipi and the subject was same. We talked about the impact of recession, the learnings from it in the field of Supply Chain, what we will miss after it is over and how is the road looking ahead. The interview has been published on Logipi here.

I largely think that supply chain innovation will bounce back strongly and that time is not too far. The positive difference we will see this time is that we will see focus on improving micro elements of supply chain rather than looking to solve the larger pieces. As we see lot of times, executives complaining that inventory turns per annum are far from the target or their service levels are not improving even after increasing the inventory - these statements will now improve to granular statements wherein the measurement will not be done for inventory turns or service levels alone but for the root causes like stock outs, inventory obsolescence, perfect order shipments or on time delivery. This will in turn improve demand for supply chain visibility improvement systems which will evolve further due to this intelligence change.