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Suppliers raise an eyebrow at demand as 2011 unfolds

by Scott Wallask

December 27, 2010

By Scott Wallask, SAP Experts

As we near the start of 2011, supply chain professionals are keeping a keen eye on the horizon as they attempt to judge whether the recession has ended, is in the midst of just another false recovery, or perhaps shows signs of continuing after the glow of the holidays fades.

A report in Automotive News explored some this debate within the realm of car manufacturers. To be sure, auto makers, especially those in the United States, have suffered from poor public perception about their products and how they have run their businesses in the past.

But other industries share with auto makers similar SCM concerns, including the following as noted by Automotive News:

  • Suppliers that have cut too deeply during the recession and now can’t meet growing demand for new products
  • Suppliers that might not believe the demand forecast of manufacturers
  • Difficulty in some suppliers securing financing
  • Suppliers running out of capacity to produce parts

An issue of trust is embedded in at least two, if not more, of the bulleted points above. Reports on economic recovery often me ntion consumer trust as a key factor, but the reality is that trust in the entire supply chain is necessary for inventory to move and demand to be met.

There isn’t a trust feature built into SAP SCM functions, so in the end – as always – the human element will help determine supply chain success in the New Year.

No one wants overstocked shelves, idle production lines, or faulty procurement. It will be interesting to see how SCM folks navigate the forks in this road in 2011 as industries attempt to determine the health of our global economy.

Follow Scott on Twitter @SCMexpert

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Dave Hannon

9/25/2013 8:51:06 PM

The complex, multi-tiered U.S. automotive supply chain is a clear example of how old business models are changing. There are many signs that the OEMs and suppliers are putting away the axes to grind and focusing more on win-win "partnerships" than hammering out one-sided contracts. The last time I reviewed Planning Perspectives' OEM-Supplier Working Relations Index study, it clearly showed automotive OEMs that share more information with suppliers get more out of their suppliers in various forms, including innovation and price.