Great Recession

Between 2000 and 2010, there were many market shifts, and companies found that without the ability to sense and adapt to market conditions, the reliable supply chain was not sufficient. In 2000, Cisco Systems was caught in the downturn of the e-commerce bubble. As a result of not sensing demand changes, the company was forced to write off 2.25 billion in inventory in 2001. This loss taught the company an important lesson. The redefinition of supply chain processes to be more resilient enabled the company to sense and withstand the downturn of the Great Recession of 2008. 

Figure 1.8 Great Recession Leaders Corrected Five Times Faster...

Sense so as to reduce failures. Companies good at risk management use network technologies to sense potential network failure before it occurs. When problems are discovered, teams are deployed to correct or help suppliers or channel partners before there is a network failure. When the Great Recession hit, Intel,... 

Recession recovery slow and painful. In 2010, shipping volumes were about half of prerecovery levels, but air and truck carriers were at capacity. The Great Recession had a devastating impact on logistics capacity with 16 percent of truck-load capacity removed from the U.S. system since 2006. This slowed in 2011 with only 665 carriers filing for bankruptcy protection. 

Each step in advancement of the S OP process delivers incremental, positive business results. In the Great Recession, companies with strong market-driven S OP processes sensed and aligned to the economic impacts five times faster than laggard companies. They were also able to obtain better year-over-year results in days of working capital. 

The Chinese government has also been raising the exchange rate of its currency, during the course of the Great Recession, at a more rapid rate than previously. In 2009-2010, it strengthened the yuan versus the US dollar by nearly 10%, more than double the rate of increase in the four years since the yuan was floated in 2005. Clearly, the Chinese have been doing this in order to reduce the amount of imported price inflation mentioned earlier. 

The confluence of crises of the late 2000s left most citizens deeply concerned for the economic and physical security of their families and their country. The Great Recession spawned by the financial meltdown of 2007-08 put millions of Americans out of work, and millions more in fear of losing their jobs, their pensions, and their health benefits. At the same time, the Deepwater Horizon spill, the Upper Big Branch mining disaster, the recalls of millions of toxic toys, and the dire predictions of climate scientists made ordinary citizens fearful for their health, safety, and environment. These powerful demonstrations of the failure of laissez faire minimalism can provide the grist for an easily accessible and compelling narrative about the necessity of maintaining robust institutions of responsibility and accountability in a modern political economy. 

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