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There are six different kinds of rest beyond sleep, if you don't take care to get more than physical rest, it may be why you're exhausted. ...
by Carlos Cordon Published 25 November 2022 in Brain circuits • 2 min read
To many executives, cost savings always seems like a good idea. However, you need to understand that cost cutting has its own price
The COVID-19 pandemic and other recent global shocks have taught us a number of lessons, one of which is that executives across the globe have been myopic when making key business decisions. To understand what this means, consider the following scenarios and ask yourself what they have in common as their root cause:
What was your initial answer to what these scenarios have in common? Was it that they are having issues in their supply chains? If that was your answer, dig a little deeper before you move on. Ask yourself why you think there were supply chain issues, beyond the obvious geopolitical reasons.
These are all examples of the knock-on effects of years of companies being hyper-focused on cost savings to keep prices low. Large corporations have used their buying power to demand lower prices from suppliers. This allowed them to sell at lower prices to consumers while boosting their profit margins. In order to be able to deliver these lower prices, suppliers have often kept their labor costs as low as possible. This is contributing to the labor shortages and supply chain problems we are facing today.
Companies that have prioritized costs above all else when selecting suppliers are now paying their own price. In some cases the stalled production and lost sales will be higher than if they had spent a little money upfront to support their suppliers when times were good.
There are a few things to ask yourself when you are evaluating your relations with your suppliers:
If you haven’t considered these factors, it is time to start taking a more holistic view of your supply chain.
Further reading: Three ways CEOs can untangle supply chains by Carlos Cordon
Professor of Strategy and Supply Chain Management
Carlos Cordon is a Professor of Strategy and Supply Chain Management. Professor Cordon’s areas of interest are digital value chains, supply and demand chain management, digital lean, and process management.
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