Economic Curveballs and Sinkers

Even though the baseball season started a couple of weeks ago, we wish the world did not join in the fun by throwing curve-balls and sinkers at this recovery! $4 plus gallon of gasoline, supply chain disruptions in Japan, and the talk of holding the the Fed’s debt ceiling in check are a couple of massive curves that potentially place our economic growth in peril.

In the April 19th issue of APICS eNews, APICS reported:

• According to the Federal Reserve, manufacturing in the United States grew for the ninth consecutive month this March


• NPR reports that factory production—including consumer goods, business equipment, and raw materials—increased 0.7 percent over February’s figures, despite supply chain disruptions related to the ongoing crisis in Japan.


• Industrial production as a whole is up about 12 percent from its June 2009 low, but it trails the September 2007 peak by about 7 percent.


• Of all major market groups, output of construction-related goods increased the most, with 1.5 percent growth. Consumer goods also increased, with 0.9 percent growth following two months of little change. Long-lasting consumer items such as appliances, home electronics, and automotive products increased, while output of products with shorter shelf lives decreased.


• While economic recovery depended on business spending in the early stages, the March figures suggest consumers now are fueling economic growth. Consumer spending rose in March, and the unemployment rate reached its lowest point in two years.

This is all great news, but we are still concerned that the aforementioned challenges are very real land mines that we must watch and manage carefully.

Any opportunity that was recently afforded via the ever improving economy for slightly heavier inventories may be ending. Keep your demand plans as short term as possible, continue to drive down lead times, drive S&OP, and collaborate with your suppliers and partners in earnest. Those continue to be the keys to navigating this on-going period of uncertainty.