Creating Value in a Volatile World

February 23, 2010
David Simchi-Levi, Civil and Environmental Engineering

With the economic recession in full swing, supply chain managers are facing a growing array of risks.  Fluctuating transportation costs, high volatility in demand volume and mix, commodity price volatility, increase in labor costs in
developing countries and the pressure to reduce inventories are just a few of the challenges that companies are struggling to overcome today and will likely face in the future.

In such an environment it is important to focus on three dimensions: Cost, Cash and Service. That is, it is important to identify strategies to reduce cost and cut working capital (cash) while at the same time maintain or increase service
levels. Of course, the increase in volatility and risks demand strategies that, while reducing cost and working capital, allow the firm to better respond to changes in demand volume and mix, exchange rates, technology or labor costs. In
particular, it is important to implement a strategy that allows the firm to cut costs while at the same time prepare for growth. This is the focus of our talk.

Watch the video of Prof. Simchi-Levi’s presentation.