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The Incredible Payback: Innovative Sourcing Solutions That Deliver Extraordinary Results

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The thrill is gone.

You are in the first seat of the intergalactic thrill ride of your
life—you got on expecting a few twists and turns; the attendant
locked you in the seat; and now your neck hurts, your hands grip
the rail, pieces of clothing and popcorn boxes are flying by, and
you’ve had enough, you want to get off. But the attendant won’t hit
the stop switch, and you and a few remaining ticket holders are
hurled along at hundreds of miles per hour, until gravity slows the
car to a full stop and you stagger off to solid ground.

When manufacturing and supply chain managers experience
the losses and chaos of a big economic shift, their hearts stop, even
when they knew the next big “adjustment” was coming. But it’s the
tectonic power of the Internet that has made the enormous shockwaves
inescapably stronger and more immediate. Even managers
in predictably cyclic industries, such as holiday toys, know that although
good planning helps to soften the blows, bad news travels
at nanosecond speed down an integrated supply chain. It is easier
(and faster) to ramp up than to turn off the machines.

Cisco, for example, which is a model of planned outsourcing
over global supply networks, shocked the market with a wash of
red ink “adjustments.” Other high-tech producers push inventory
and capacity responsibilities back onto suppliers as they struggle
for a foothold during big swings. Book publishers, automobile
manufacturers, appliance producers, retail, and even some pharmaceuticals
continue to wrestle for control as violent demand
swings jerk them up and down. Second- and third-tier suppliers,
the small- and medium-size companies whose growth rates have
enriched our economy for years, have had the life squeezed out of
them by their bigger customers. Life has gotten ugly out on the periphery
of the supply chain, and we have no idea when the ride will
stop.
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