Small and Mid-sized Companies See Signs of Recovery

Logistics Today - Despite rising energy costs and dim employment data, small and mid-sized manufacturers see signs for optimism, according to a new survey of CFOs. The top supply chain strategy for weathering the recession has been reducing inventory levels. Prime Advantage, a buying consortium for mid-sized industrial manufacturers, conducted a survey that included input from the chief financial officers of the consortium’s member companies.

In another sign of a sluggish recovery, 57% report that domestic employment in their factories will not return to year end 2007 levels before 2011 or 2012. However, when asked whether they would hire new staff to meet an increased demand in 2010, 82% responded affirmatively.

Some popular ways of overcoming the recession hangover and improving liquidity are to “keep reducing inventory levels” (79%), followed by “working to improve purchasing and sourcing efficiency” (52%) and “implementing asset and inventory optimization plans” (48%). Although members took a variety of actions in 2009 to face the recession’s challenges, the majority (56%) believes these actions will not reduce their companies’ long-term growth prospects. Yet, 22% believe that cuts in marketing and advertising spending could limit future growth.

In addition, 70% say they will continue to focus on cutting operational costs as their top corporate priority. Fifty-five percent say their organizations are focusing on developing new products and services in response to changing consumption patterns, while 52% say it is a priority to both “respond quickly to future economic changes” and to “find new markets for products and services in response to the recession.”