- Everyone's anticipating a potential economic downturn
and that has major implications
for how companies manage their supply chains.
But they need to learn from their mistakes during Covid.
In early 2020,
companies were afraid of a drop in demand,
so they shut down plants,
let go of workers, and stopped buying raw materials.
But when demand quickly bounced back,
many companies could not ramp up fast enough.
In some cases,
it's taken years to catch up.
Right now,
companies should be scenario-planning
and carefully considering where and how deeply to cut.
The key is to figure out where an investment
in continued capacity has the potential
for the greatest returns.
Whether it's their most profitable products
or those most likely to suffer from market-wide shortages.
When demand does return,
they can capture market share from unprepared competitors,
gains that they'll be able to retain for the long term.