Friday, March 21, 2003
Although companies may not be anticipating immediate business disruptions from the war in Iraq, potential transportation interruptions and post-war uncertainty is weighing on executives' minds, according to a report released today from AMR Research Inc.
While most manufacturers said they have not dramatically altered their planning scenarios, their primary concern stems from managing logistics-related problems, such as international shipping and travel, the AMR Research FastFacts survey found.
Of the 35 manufacturers polled, 42% indicated that international trade logistics was the largest business concern so far. About 7% pointed to supply shortages as a problem, which AMR says indicates that contingency supply plans may have already been implemented.
Nearly 25% of manufacturing companies said that they are holding higher than normal levels of finished goods and raw material inventories, which will depress profits and extend new purchasing triggers, AMR noted.
Continued softness in profits combined with uncertain consumer demand will likely delay business expansion and capital spending, the Boston research firm predicted.
Additionally, AMR suggested that companies should begin considering how post-war strategies will impact their supply chain costs.
For example, manufacturers of products requiring high energy consumption or transportation costs may want to consider using supply chain modeling tools to analyze potential scenarios. Also, companies may want to look at how higher oil prices may influence decisions to stock products in locations closer to key customers to minimize less-than-full truckload shipments.
By: DocMemory
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