Frank

Supply Chain Apocalypse? I can't even spell the word!

Did you know this is Armageddon Week on the History Channel? Every night there’s going to be a program on how close we are to the end of the world. They kicked the week off yesterday with a marathon of shows on “The Seven Deadly Sins.” Greed and Pride were highlighted as the basis for our current business woes. Then they had a special on Nostradamus and his prediction that the world as we know it would end in December of 2012. What a great way to cap off the holiday season!

Well, December 2008 wasn’t too jolly for the manufacturing sector. All industries posted declines in manufacturing activity, according to the latest Report on Business from the Institute for Supply Management. That marks the fifth consecutive month in which economic activity was stagnant. The overall economy contracted for the third consecutive month, the report added.

Norbert J. Ore, C.P.M., chair of the Institute for Supply Management™ Manufacturing Business Survey Committee reported that new orders have contracted for 13 consecutive months, and are at the lowest level on record going back to January 1948. He added that manufacturers are reducing inventories and shutting down capacity to offset the slower rate of activity. The Inventories Index registered 38.8 percent, which is 0.3 percentage point lower than the 39.1 percent reported in November.

I don’t know if all that’s enough to prove that Armageddon is around the corner, but how about this: a recent report from Bloomberg News said that Toyota Motor Corp. is rethinking its “Just-In-Time” philosophy in order to rescue suppliers from bankruptcy—and to save itself from supply chain disruptions. The report says Toyota may even work with more parts makers and increase inventories to further protect itself from collapses among suppliers—which also supply Detroit automakers. Toyota fattening up its inventory?

Maybe the end IS near.

Posted by Frank on January 5, 2009 | Comments (3)