The Vendée Globe sailing race is one of the most brutal in the world. Competitors sail for four months around the globe, single-handedly without touching land. The fastest sailors in the calmer northern waters are often not the same ones in the lead after the turbulence of the Antarctic seas. That's not a bad metaphor for the current economic climate, except that instead of four months of turbulence, a real recovery is not forecast until 2010.

Supply chain leaders can make sure their companies cross the finish line ahead of the competition when the recovery ensues by clarifying their performance targets, choosing the right tools to maintain momentum, and clearing the way for effective decision making.

Downturn Sprinters

As with the Vendée Globe, some companies in leading positions may end up trailing the competition or even failing to finish the race, perhaps by falling into bankruptcy or being taken over by another competitor. When we look at the fate of public companies in the 2001 recession, surprisingly, a market leader's chance of ending up trailing competitors was greater than retaining the lead. On the other hand, many companies in the second and third tiers of their industries moved up to the top. This reshuffling in the downturn was much more significant than in normal times; about twice as many companies in the group of top performers lost their leadership position during the 2001–2002 downturn compared with the subsequent boom period.

Much of this share change happened toward the end of the downturn, when healthier companies started taking steps to gain altitude faster than their competitors or investments sustained through the downturn started to pay off in improved customer revenues. That is what makes the end of a downturn an excellent time for companies to be thinking about performance improvements and preparing themselves to gain position in the recovery.

Read the full article at Supply Chain Strategy online