This subject is not directly related to inventory but it is a factor involved.
I wanted to talk a little about companies in the current economy and problems they face during recessions. I believe a main problem most companies run into today is they falsely believe that the current situation will always continue to improve.
By this I mean that companies tend to want to expand and open new stores as quickly as possible while overlooking that things could do go downhill at any time without warning. So companies that have been pushing hard and really taking risks to expand and make as big of strides as possible are really hit hard when we enter into a period of recession as we are now experiencing.
This results in many companies facing bankruptcy or having to sell to another company in the industry when times get rough. Many times these expansions happen too quickly and the proper care is not taken to make then necessary changes that come with increasing globalization and a larger logistical network.
I think that they should focus on improving their logistic network, cutting costs, cutting inventories, and optimizing their systems before moving to expand. By taking these precautions as they make these expansions, they keep the company much safer and more stable. Instead, they tend to wait until crunch times like now to try to scale back and cut costs and it becomes very hard to rush the necessary changes. The companies might just cut workers and make short term changes that don't really fix the problems, and then go back to expanding and doing the same things they always did when the economy starts to improve again.
I think this is a very dangerous way of handling the problems of the economy and managing the expansion of a business. Much more attention can and should be paid to issues such as this in U.S. companies.
-Mark Brislin
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I agree with you Mark. We all joke about there being a Starbucks on every corner, but the reality is they are having to close several stores because they can't afford to staff them all and keep them profitable. I attended a conference in Connecticut this weekend and one company was being honest about their hiring situation. I talked with a representative from Nissan who said that they weren't offering as many jobs as they usually do because of the economy right now. She mentioned that they may have more jobs opening in the spring, but didn't want to hire someone unless they knew for certain they would have a job in May 2009.
I think if companies took a more conservative approach when the ecomony rebounds it will be beneficial to everyone. I'm hoping that everyone is realizing that we all need to have a back up plan just in case the economy takes another bad turn. Once I graduate I am hoping that I will have a job for more than a couple years and not have to go through layoffs because companies don't know their limitations.
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