Industry Insights
Back to basics: Planning for a “return to normal” for supply chain operations
Automotive parts industry see pockets of significant growth
Is retail changing forever right before our eyes? Opportunity for some--threat to others
February retail sales best since recession started
For past Industry Insights articles, please visit the Industry Insights Archive.
Back to basics: Planning for a “return to normal” for supply chain operations (03/10/2010)
The economy is bumping along some route to recovery, which is clear. What is not clear, however, is how sharply the recovery will occur and how strongly it will return to pre-fall 2007 volumes. Given this level of uncertainty, supply chain experts are suggesting that companies constantly review their “basics” including refreshing operations standards and practices, closely monitoring productivity, and evaluating whether technologies are being fully implemented.
By refreshing operations standards and practices, supply chain managers are keenly familiar with areas that might provide a weak link in the chain. In the event of a disruption (weather related, spikes in commodity prices, challenges with sourcing, and so on), speed to market depends on being able to rapidly react to these changes and adapt operations to fit.
During a two-year span of workforce reductions, the need to keep a close watch on productivity is critical. Current employees are being stretched thin and in many instances, significant expertise has been lost in the shuffle. Companies keeping an eye on productivity will be able to “see” bottlenecks and inefficiencies develop, and can work to fix those productivity gaps.
Getting full use out of technologies will also be critical in ensuring that productivity can continue to match lower business volumes as the economy slowly recovers. Refreshing training courses and making sure that technology use is being maximized will help in making a smooth transition from recession--to recovery.
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Automotive parts industry see pockets of significant growth (03/10/2010)
There is an inherent risk in saying that an entire industry is experiencing significant growth and prosperity. As is typically the case, a number of companies in the industry raise their hands, wondering where their prosperity is.
That seems to be the situation in the automotive industry. Ford reported a nearly 50% increase in sales volume in February, followed by a number of auto manufacturers in the industry that experienced growth in February. The auto parts suppliers in the industry are also experiencing their own boom of sorts--in pockets.
Some auto parts manufacturers are adding additional production shifts, increasing their rate of imports, and building up inventories of parts as assembly lines heat up. With auto manufacturers going through a sharp uptick in demand early in 2010, the future would seem to be looking up for the entire sector.
But, there are some caveats. Although year-over-year auto sales are improving and showing sharp increases, the U.S. is still on track to sell only 10.5 million units in 2010. This is down sharply from the average 16-18 million sold in previous years. China will sell more vehicles than the U.S. this year. So the increase in activity is off of a very weak base, and growth will be moderate on an historical perspective. For now, analysts are excited about the prospects in the auto parts industry and the multiplier effect that it could provide to the broader economy.
More here.
Is retail changing forever right before our eyes? Opportunity for some--threat to others (03/10/2010)
A retail revolution is right before us, and if supply chain managers and suppliers are not paying attention, it could threaten their business. The smart phone can now be outfitted to scan bar codes with new applications installed in them. This capability has opened a floodgate of possibilities for the retail industry, because it connects a shopper with a world of options and services not previously available.
As the linked article mentions, there are countless applications where this technology will be used.
One customer was shopping at a discount retailer and scanned the bar code of an item he was interested in. Within seconds, he found the same item online for 20% less and could order it on the spot and have it shipped to his house. Unfortunately, it was not the retailer in whose store he was shopping.
Another shopper scanned an item she was interested in and the retail store she was in had a video downloaded to her phone describing special features of the product. It closed the deal without a sales person there to answer questions. The possibilities and applications are endless. Some retailers are experimenting with product location services (finding a specific item in a store and allowing the phone to direct shoppers to it). Others are opting to send specific promotional offers and coupons to customers by phone, based on the specific item they have just scanned.
Many major brick-and-mortar and e-tailers that embrace this revolution are doing their research and development on the technology at this moment, for implementation later this year and aggressively in 2011/2012. Retailers who embrace opportunities that come through this technology use will capture new market share and increase value to shoppers. Those who do not explore or implement the technology risk loss of share if there are suitable competitive products or services.
Regardless, smart phone sales are skyrocketing and will be commonplace in the next two-year technology cycle. It will change the way the average consumer shops and captures research on products and services. Supply chain managers need to take note and start understanding how this new technology will change shopping patterns.
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February retail sales best since recession started (03/10/2010)
In one of the most recent sources to report on retail sales, the Retail Metrics report for February showed that U.S. comparable-store sales rose 4.1%. Weather-related problems up and down the East Coast likely pulled as much as 2% off of those figures in the month, according to the company. That report has analysts excited about the potential for better economic reports to come if the consumer is indeed showing more resolve and has begun to come out of their hibernation.
Consumer spending accounts for more than 70% of the nation’s GDP. With an unemployment rate above 9% and an effective unemployment rate nearing 20%, consumer spending has been under pressure for the past 24 months. This impact has swept through the retail, manufacturing, housing, wholesale goods, and services industries over the span of the recession.
The retail report provides some hope that perhaps the worst is truly behind us, and the recovery will continue. However, making life a little difficult, a number of economists began to whisper the double-dip recession notion last week. These opinions were largely dismissed because of reports like this one that show better activity happening, despite some difficult weather conditions.
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For past Industry Insights articles, please visit the Industry Insights Archive.
