Table of Contents
The single most important issue in the paper is opportunities that a business has in order to manage its operations in a scalable way, when there is a high level of investments in variable resources and assets Whenever there is an uncertain recovery, the operations of a supply chain need to be flexible and scaled, since an economic recovery is anticipated (Chan, Wang, Luong, & Chan, 2009).
Eric Olson, the author of the article entitled Supply Chain Opportunity in an Uncertain Economic Recovery, aims to explain the benefits of flexibility and scalability, especially while rebuilding the operations of a supply chain from a downturn. The findings of the approach indicate that variable-cost supply chains and scalable ones are advantageous, especially when there is a high level of risk and uncertainty during an economic recovery.
Supply chain scalability and flexibility benefits can be easier to achieve. This idea has changed the business landscape, where firms have drained inventory levels, reduced their labor force, closed some facilities and cut costs. Hence, there is an opportunity, where more variable-cost business models can be renewed, as their operations grow to meet new demands. The global economic recession has affected all business operations in various sectors, causing most organizations to reduce organizational resources, curtail spending on technology, and drain their inventory. It is an effort to ensure that firms remain profitable even during hard economic times, where supply chain activities are scaled back (Fantazy, Kumar, & Kumar, 2009).
When the economy is recovering, firms are required to be proactive in order to anticipate growth, and even survive when the market remains uncertain. When there are uncertain demands and supply, companies need to make supply chains more adaptable and flexible to the environment. The benefits of supply chain flexibility and scalability can be achieved easily. Both cost less and are easier to achieve when coming out of a serious recession. It is because many costs usually associated with the construction of the model are normally paid while overcoming the downturn.
The costs involved in restructuring may include workforce reduction, and the underutilization of assets associated with facility closure. In addition, after a business has scaled down its supply chain and operations, it can design scalable and flexible supply chain strategies that will help in bringing back operations when economic growth starts.
There are benefits as a result of resource models, where firms currently seek to mark growth even during hard and uncertain economic times. It is achieved by using the mix of part-time, full-time, contract and temporary employment. It is possible for businesses to cost-effectively acquire economic growth without the risk of a downturn by determining the required staffing, and identifying the best and worst scenarios for economic growth, the capacity required and competitive pressure (Huber, Gupta, & Hegde, 2009).
Reduction of Risks through Scalable and Flexible Supply Chains
There are benefits associated with the consolidation of procurements into outsourcing and shared services. When firms grow, they can attain scalability and flexibility in other areas of the supply chain, even when the economic surroundings become unfavorable. Outsourcing helps in ensuring that resources present in a firm are involved in activities that have a higher value. Other functions can also be outsourced to shared services that benefit an enterprise. Traditionally, outsourcing in a supply chain occurs mainly in logistics, inventory management and transportation.
Flexible and scalable supply chains help in the prevention of risks, whereby opportunities are captured during the period of uncertain economic recovery (Gavin, 2009). A flexible and scalable supply chain helps mitigate risks, even when the economic recovery is uncertain, and there is stable growth. At this point, an organization will have an additional opportunity of reassessing its growth and potentially optimizing its operations.
Identifying and Capturing Scalable and Flexible Opportunities
When an enterprise assesses its current state, it can capture and identify opportunities in order to implement its plans for growth in a variable and scalable way. There are steps that can be followed in identifying and capturing benefits of the existing opportunities. The first one is when an organization assesses its current situation and collects information about how it has changed due to going into recession.
The second step will use knowledge in the creation and identification of opportunities in order to ensure flexible and scalable operations. The third step involves communicating and governing investment activities (Chae, 2009). The fourth one presupposes the establishment of control, measures and performance indicators to evaluate success and manage risks in an uncertain recovery.
It is important for inventory levels to be monitored and evaluated, when buying preferences of customers change. There are risks when the stock is out, since revenues may be lost; hence, it is necessary to report and manage the inventory properly. Maintaining and improving flexibility and scalability through the uncertain economic recovery reduces most risks associated with the capture of growth opportunities. There is no reflection of unstable market dynamics (Heng, Wang, & He, 2005).
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When rebuilding capacity in the supply chain, companies usually have several options that can help them become more flexible and scalable during hard and uncertain economic times associated with recession conditions. This paper has showed that it is easier for an enterprise to achieve scalability and flexibility through rebuilding. It is therefore important that before making a large capital investment, an organization needs to look around in order to identify whether the task can be outsourced to another firm, which has made investments and has even more favorable economies of scale.