What was it like when you stepped out of your house this morning? Here in Chester it has that feel of autumn - and from my office window I can see the leaves beginning to fall. But it's not only autumn storms we've got ahead - the coming year is going to be economically stormy as well. The word I hear everywhere is "volatile".
So what should you do? Batten down the hatches and hope for the best - or can you do something to help you weather the storms ahead?
I've been researching this for you, and I've found an article that you really should read. Now, you're thinking it comes from some abstruse economic journal. But it doesn't - it was written over 2000 years ago. Here it is - in full:
"A very large Oak was uprooted by the wind and thrown across a stream. It fell among some Reeds, which it thus addressed: "I wonder how you, who are so light and weak, are not entirely crushed by these strong winds." They replied, "You fight and contend with the wind, and consequently you are destroyed; while we on the contrary bend before the least breath of air, and therefore remain unbroken, and escape."
Yes, that's right, it's one of Aesop's fables. But the lesson is still very relevant in today's world. If you want to survive the stormy times ahead you should be flexible and quick to adapt. So how you can you apply that to your supply chain?
TIP #1: KEEP YOUR STOCKS LOW
You should keep your stockholding as low as possible. That's because stock reduces your flexibility - for two reasons.
First of all, it swallows up your cash. Never mind what the adverts for credit cards say. In uncertain times, cash is your flexible friend. If you have cash, you have an asset you can use whenever, or wherever, an opportunity presents itself.
Secondly, if you're holding a lot of stock, you can't respond to changes in what your customers want, or move into new markets that open up. If your warehouse is full of stock, you're trapped into selling what you've got, instead of letting your customers buy what they want.
TIP #2: CUT YOUR COSTS
Cut your costs - and then cut them again. Keep looking for ways of reducing your costs. The main reason for doing this is that it puts cash in your bank, and you've already seen that cash makes you flexible.
But there's another reason. One of the best ways of cutting cost is to stop doing things that don't add value. You'll be surprised how many opportunities you have when you start looking for them. Let me tell you why.
Business processes are difficult to change. Everyone gets used to them, no-one questions them and all your systems are set up to run them. So when your customers need you to do something new, you don't change the process - that's too difficult. You add something on, a work-around - but leave the old activity in place.
It's all these old activities that hinder you when you need to respond to a changing market. Cut them out and you'll be nimbler than your competitors when you spot an opportunity.
TIP #3: DON'T TIE YOURSELF DOWN TO ASSETS
If you want to adapt rapidly to new products, new markets and new supply channels, what slows you down?
Almost certainly it's your assets - mainly warehouses - and your systems. These are least likely to be adaptable and easy to change. So think about your need for flexibility and responsiveness when you invest in your supply chain.
Of course, I'm not suggesting you shouldn't invest - but when you do, ask yourself these questions:
- will it be easy to change the product I handle in this warehouse?
- will it be easy to serve a different market from this warehouse?
If the answer to either of these questions is "No" - think twice.
So that's the message for you take away - and this month it's not from me, it's from an ancient Greek! In stormy and volatile times, your best strategy is to be flexible. Cut your stockholding, cut your operating cost, and don't tie yourself down to fixed assets that can't adapt to change.
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