Spending lag prompts supply chain management makeovers

The precipitous drop in consumer spending that has been cited as a major cause of the ongoing economic recession now has manufacturers scrambling to adjust supply chain management strategies. In fact, lower consumer spending took the top position on the list of supply chain risks in a recent survey conducted by Boston-based AMR Research.

05/01/2009


The precipitous drop in consumer spending that has been cited as a major cause of the ongoing economic recession now has manufacturers scrambling to adjust supply chain management strategies.

In fact, lower consumer spending took the top position on the list of supply chain risks in a recent survey conducted by Boston-based AMR Research.

"As retailers cut inventories in the face of softening demand, this risk is cascading up consumer and industrial supply chains," Noha Tohamy, an AMR Research VP said in a report summarizing the survey's findings. "Companies like Cisco and Procter & Gamble are grappling with tactical questions, like where to cut and position inventory, and strategic initiatives, like where to source and how to rationalize their supplier bases to remain healthy during the downturn and be well-positioned for the next recovery cycle."

Tohamy said AMR conducts this risk assessment survey on a quarterly basis, and it's clear from the results of the most recent canvass—covering the first quarter of 2009—that the economic downturn is dominating the thinking of supply chain executives. "Lower consumer demand is dominating the list of risks this quarter, with 37 percent of respondents identifying it as No. 1," Tohamy said. "Additionally, only 15 percent expect this risk to decrease by next year."

Product quality failures placed second on risk list, with 35 percent of respondents identifying it as their second top concern.

Volatile energy and commodity prices—which consistently took first and second place honors last year—placed third and sixth, respectively, on the most recent list.

The potential of having intellectual property stolen was fourth-highest risk factor cited in the latest survey. This fear—coupled with concern over product quality—appears to be causing manufacturers to rethink outsourcing and offshoring strategies.

For instance, Tohamy said, China—which continues to be plagued by both recall and IP protection problems—is now getting more competition from India as a manufacturing center, and more U.S.-based manufacturers are looking at nearshoring.





No comments
The Top Plant program honors outstanding manufacturing facilities in North America. View the 2015 Top Plant.
The Product of the Year program recognizes products newly released in the manufacturing industries.
The Engineering Leaders Under 40 program identifies and gives recognition to young engineers who...
World-class manufacturing: A recipe for success: Finding the right mix for a salad dressing line; 2015 Salary Survey: Manufacturing slump dims enthusiasm
2015 Top Plant: Phoenix Contact, Middletown, Pa.; 2015 Best Practices: Automation, Electrical Safety, Electrical Systems, Pneumatics, Material Handling, Mechanical Systems
A cool solution: Collaboration, chemistry leads to foundry coat product development; See the 2015 Product of the Year Finalists
Digital oilfields: Integrated HMI/SCADA systems enable smarter data acquisition; Real-world impact of simulation; Electric actuator technology prospers in production fields
Special report: U.S. natural gas; LNG transport technologies evolve to meet market demand; Understanding new methane regulations; Predictive maintenance for gas pipeline compressors
Cyber security cost-efficient for industrial control systems; Extracting full value from operational data; Managing cyber security risks
Getting ready for industrial IoT; Visualizing the (applied) automation continuum; Preventing VFD faults and failures; Using wireless for closed-loop applications
Migrating industrial networks; Tracking HMI advances; Making the right automation changes
Understanding transfer switch operation; Coordinating protective devices; Analyzing NEC 2014 changes; Cooling data centers

Annual Salary Survey

After almost a decade of uncertainty, the confidence of plant floor managers is soaring. Even with a number of challenges and while implementing new technologies, there is a renewed sense of optimism among plant managers about their business and their future.

The respondents to the 2014 Plant Engineering Salary Survey come from throughout the U.S. and serve a variety of industries, but they are uniform in their optimism about manufacturing. This year’s survey found 79% consider manufacturing a secure career. That’s up from 75% in 2013 and significantly higher than the 63% figure when Plant Engineering first started asking that question a decade ago.

Read more: 2014 Salary Survey: Confidence rises amid the challenges

Maintenance and reliability tips and best practices from the maintenance and reliability coaches at Allied Reliability Group.
The One Voice for Manufacturing blog reports on federal public policy issues impacting the manufacturing sector. One Voice is a joint effort by the National Tooling and Machining...
The Society for Maintenance and Reliability Professionals an organization devoted...
Join this ongoing discussion of machine guarding topics, including solutions assessments, regulatory compliance, gap analysis...
IMS Research, recently acquired by IHS Inc., is a leading independent supplier of market research and consultancy to the global electronics industry.
Maintenance is not optional in manufacturing. It’s a profit center, driving productivity and uptime while reducing overall repair costs.
The Lachance on CMMS blog is about current maintenance topics. Blogger Paul Lachance is president and chief technology officer for Smartware Group.
This article collection contains several articles on the vital role that compressed air plays in manufacturing plants.