Supply Chain Solutions 2010: Optimizing value through working capital and M&A
Over the past year, nearly all companies and their supply chains felt the squeeze of the global recession, tight credit markets and a precipitous drop in demand. Uncertainties and fears about when, whether and how the market would recover ran rampant. In the face of these pressures, most companies responded by cutting staffing levels to the barest minimum and reducing costs wherever they could. A few companies were able to take advantage of bargains in the M&A market, but most simply hunkered down to survive the economic maelstrom.
Each year Grant Thornton LLP collaborates with World Trade magazine on a series of three surveys concerning supply chain solutions, which are intended to provide a snapshot of issues and opportunities in the supply chain industry. This second survey, Optimizing value through working capital and M&A examines supply chain decision-making and trends during the past year. Key findings in this survey include:
- Nine in 10 (90%) survey respondents took some action to reduce the working capital invested in their supply chains, up from 78% in 2009.
Respondents primarily relied on negotiating price concessions and altering payment terms rather than making investments in infrastructure such as warehousing or transportation upgrades. In fact the percentage of companies investing in inventory infrastructure shrank from 50% in 2009 to 34% in 2010. - While four in 10 (40%) respondents report that they have explored making acquisitions, companies tend to be much more cautious than in the past: Only one-quarter (25%) of potential acquisition deals that respondents considered actually closed.
