Introduction
The IMF's bi-annual World Economic Report for 2013 is just out. And the news isn't too good. There's excessive short-term fiscal tightening in the United States, prolonged stagnation in the Eurozone, pessimism about the economy in Japan, uncertainty in emerging economies – and more. More confirmation of the bad news: Davos 2013 closed with the bleak observation that the economic recovery has been fairly unspectacular and much won't change in the near future. And OECD has slashed its growth forecast for 2013, indicating the risk of a serious global recession cannot be ruled out.
Obviously, companies are a worried lot. They're having to tighten their belts significantly, but the trouble is there aren't too many notches left. Supply chains are in a fragile state and will be under pressure throughout 2013 to sustain top line revenue growth. Cost reduction pressures will most likely increase as firms try to preserve cash and reduce expenses. Procurement teams will be challenged to uncover even more cost-cutting opportunities.
What does this mean for companies? Perhaps this is the time to shift away from short-term measures and dig deeper into the supply chain to look for solutions. This would not only help them weather these troubled times but also enable them to prosper when the good times return. Firms have to sow the seeds of growth now to reap results later.