Supply Chain Leadership in Tough Times

What do Gandhi, Winston Churchill, FDR, Deng Xiao Ping, Bismarck, and Abraham Lincoln have in common? Despite the differences in times, places and circumstances, each of these took a large and divided group of people staring despondently in the face of an abyss and – with gritty determination, inspiration and pragmatism – steered them to relative safety and prosperity. These were the true leaders for the tough times.

No doubt, these are tough times. Reactions are quite predictable. Economists are debating whether this is technically a recession or a depression. Politicians are debating which groups of people deserve their largest largesse. Populations are moving from denial towards anger. Meanwhile Business People are wondering who will survive and how. In this article, rather than focus too much on technical definition of the economic situation, or on public psychology, or on politics of the band-aid handouts, we will focus on way out of business peoples’ dilemma. In doing so, we will try to look well beyond the simplistic two-by-two matrices and banal three-arrow-diagrams traditionally used by management consultants everywhere.

Tough times call for different style of leadership. Why? – We will quote one of our dear departed teachers to illustrate the point. Capt. Rewari, our navigation instructor in Merchant Navy Officer’s course used to remind us before every training session “when the sea is calm and in vast open ocean with little traffic – even your girl friend and my wife (both untrained navigators) can navigate a super tanker with very little training. But I am preparing you for the times where your skills will be truly tested – e.g. in treacherously narrow waters of Malacca straits in a tropical squall with shipping density of nearly 100 ships per square mile, and perhaps pirates chasing you.”

To find the way forward, we have to first briefly examine the dilemma currently faced by businesses – large and small. On one hand, in the absence of credit, all but most essential demand is drying up. Suddenly, even the well heeled are warily watching their dollars (and Yen, Yuan, Euros, Pounds and Rupees) lest they get caught without liquidity. But they are in minority. The majority is already facing a liquidity crunch – as debts are called in, expenses, overtimes and allowances are cancelled, and in some cases, jobs are lost. On the other hand customers are becoming even more demanding. While the margins are slipping, economies of scale and scope are eroding, surplus of production and inventory capacities is growing and the work-force is insecure and resigned. And this is only the first wave of the financial tsunami. Some analysts expect the second wave to be a lot more destructive.

So what has Supply Chain Management got to do with all this? We will come to that in a minute when we examine what we believe is the way out of the current dilemma. But first let us see how Supply Chains are ‘mutating’ as a result of the current economic climate. While a detailed examination of this topic is deferred to our article in the next issue of this magazine – we outline 4 prime DNA mutations in the Global Supply Chains that can likely result from the GFC (Global Financial Crisis):

1. Stifled Monetary Flows: Out of the three flows that constitute the Supply Chains, perhaps the monetary flow is the most IT Equipment Supplies vital. The adage goes money is the life blood of commerce. As the liquidity crisis bites, banks stop honouring each others’ Letters of Credits, the international trade grinds to a halt. Cargo stock piles at unlikely locations, shipping services are severely disrupted and all finely tuned supply chain planning and scheduling is out of the window. While the current legal mess will take many years to sift through, we suspect this will leave a permanent mark on the Global Supply Chains. Akin to permanently constricted blood vessels from a high cholesterol diet – this will expose the future Global Supply Chains to frequent threats of systemic seizure, lowering the velocity of trade and perhaps increasing the transactional burden. We will discuss the full implications of this in the detailed article.


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