Five Lessons for Supply Chains from the Financial Crisis

Summary: For many supply chain executives, the Financial Crisis has been one of the toughest challenges in their careers. Firms across industries were required to deal with huge demand-supply mismatches caused by collapsing demand. However, the supply chain community found innovative ways to deal with the challenges of these tough times. Here are five action areas supply chain managers should be aware of—before the next crisis.

Written by Kai Hoberg and Knut Alicke. Kai Hoberg is associate professor of supply chain and operations strategy at the Kühne Logistics University. Knut Alicke is master expert of McKinsey & Company and a member of the global leadership team of the supply chain practice. 

On page 51: Top companies have endeavored to answer these types of questions and have typically aggregated them into a few scenarios. Several companies have even developed more advanced economic models to analyze the effects of early indicators on the world economy and to develop scenarios and action steps accordingly.

So I conclude that according to McKinsey the modeling approach of DSM in the crisis, as described in the first reference to this article, was more advanced than what even Top companies were doing. 

End Notes

1. Peels, R., Udenio, M., Fransoo, J. C., Wolfs, M. & Hendrikx, T. (2009): Responding to the Lehman Wave: Sales Forecasting and Supply Management during the Credit Crisis, as BETA Working Paper Series, nr. 297, December 5th 2009, p. 1-20

2. Dooley, K. J., Yan, T., Mohan, S. & Gopalakrishnan, M. (2010): Inventory Management and the Bullwhip Effect during the 2007-2009 Recession: Evidence from the Manufacturing Sector, Journal of Supply Chain Management, January 2010, Vol. 46 Issue 1, p. 12-18 

3. Hoberg, K. Udenio, M., Fransoo, J. C. (2013): How Did You Survive the Crash? An Empirical Analysis of Inventory Management Capabilities in the Financial Crisis. Working Paper.