Just in Case

Just in Case

Professor Edward Anderson of the Australian Graduate School of Management says some organisations will now have greater concerns about the operation of B2B marketplaces, particularly regarding the security capability of other players in the marketplace.

"In certain fields you look to a B2B marketplace to increase your market reach. In other words to allow you to have customers or suppliers that you wouldn't normally reach through everyday business contacts - in particular, customers or suppliers overseas in certain industry sectors. You may now feel there is increased risk in the present environment in dealing with people you're not familiar with, although I don't think those kinds of concerns are going to be a major factor in most companies' thinking about their supply chains."

Consumers also perceive increased risk in dealing with products of uncertain origin. J D Edwards product marketing manager Neil Hawthorne says many organisations that are now rethinking their extended supply chains are concerned about product integrity in the wake of the mail-based anthrax attacks as well as the fear of chemical and biological weapon attacks, which further eroded consumer confidence and heightened the general sense of insecurity.

"I think some of the companies are basically saying: ‘Look, I'm not too sure that we're comfortable with some of these long supply chains and maybe we need to be looking at alternate sourcing, and particularly local sourcing of products and commodities'," Hawthorne says.

Suddenly uneasy about strategies that have sustained them for some time, Hawthorne says many companies are ordering buffer stock and planning growth in wholesale distribution. "If they have got long supply chains then they are certainly thinking of buffer stocks a lot more. One of the trends I'm observing is the idea that wholesale distribution probably isn't so bad anymore. That it's not a bad idea to have someone else carrying some stock in between."

Meanwhile the downturn in the developed worlds' economies has increased the volatility of demand, making it much harder to predict. That not only greatly complicates effective supply chain management, but also makes it more vitally important than ever.

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