I wrote a short time ago about how MDM can help firms cope with the current economic down-turn. Specifically, I talked about how MDM can help reduce business costs (lower inventory levels, and rationalize supplier spend) as well as help protect customer service and revenue. It seems that many different areas of IT are also being applied or adjusted to help with managing the business in a down-turn. Putting on my old “supply chain” hat this morning, I read one of the vendor newsletters. Here is Barloworld Optimus’s “Inspiring results in Supply Chain Planning”. There is a neat script explaining how demand planning can be used to help evaluate the market conditions that you might face. The “Woolworth” situation referred to in the article is the situation (in the UK in this case) where a large customer (Woolworth’s) just happens to go broke or into receivership and as such, a large percentage of your customer business might literally, overnight, disappear. Demand Planning can help you evaluate what the impact might be on the business, and play ‘what-if’ games to determine what actions can be taken to help negate the impact.
This article reminded me of a TV program I watched last night. It was a CNBC documentary program called, “Saving GM: Inside the Crisis” (re-aired December 12th). The focus was the supplier community that has built up over the years around the US auto-industry. Though the program reported the possible, even likely, negative impacts on families through pending lay-off’s, I was left with some major questions in my mind. Why did and do so many parts suppliers remain focused on a customer base that has been dying slowly for years? One part supplier covered in the program explained how, over 50 years, they built up a business that is fully 50% dependent on GM specifically, and indirectly via other component suppliers, 80% dependent on the US auto-industry in general. Why on earth did the supplier build such a risky business model? Why didn’t they evaluate the possibility of targeting the aerospace and defense industry? Or the commercial airline industry? Why put all their eggs in one basket? Surely any good business strategy would lead suppliers to build a robust customer base… Perhaps these suppliers were just too “heads down” focused and not business savvy. Perhaps they didn’t use IT to help play, “what-if” games to evaluate the impact of market dynamics on their business. Hopefully there is still time for these firms to adopt technologies like MDM and Supply Chain Planning to make better, smarter decisions, to save themselves money.