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The recession crisis in the US has had all kinds of effects, especially here in the San Francisco Bay Area where so many people have already lost their homes and their jobs. This crisis has significantly affected retail sales in the US, forcing many companies to downgrade sales estimates as jittery consumers spend less. When I have less money to spend or I feel uncertain about the future, I buy smaller sizes of things, skip optional products and walk away from unnecessary items. I am typical of most consumers.

The effect on global supply chains may not be common knowledge, but it does affect our consumer life styles. When sales of any item slows, the supply chain starts getting backed up and clogged with inventory. In the current recessionary environment, that means that global supply chains are slowing to a trickle until inventories are sold off or spending picks up again. When we stop buying goods in the US, factory workers in China feel the pinch. Too much inventory in America means working capital is tied up in purchased goods. Some consumer goods become hard to get because they are slowed down in the pipeline somewhere in the world. Other items are overstocked and undersold. The global supply chain is off-balance. Supply and Demand are out of sync.

The best-of-class supply chains react fast to events, slow-downs, trends up and immediate opportunities. The key to their success is managing and interpreting information across the global supply chain. The best supply chains leverage information to control the flow of goods and adjust supply to sync with demand. The best supply chain professionals have learned to act early and fast.

 

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