MANAGEMENT

Supply Chain Management

Supply Chain Management

Introduction

The world economy has been experiencing one of the worst financial crises since the Great Depression of the thirties of the twentieth century. The crisis originated in the United States were the main factors causing the high prices of raw materials, the overvaluation of the product and the credit crisis and mortgage eventually affected the confidence of markets and economies worldwide. In the Latin American case, the economic boom that was experienced between 2003 and 2007, based on an unusual combination of financial boom, boom exceptional raw material prices and higher workers' remittances, had also come to an end. Already in 2008 several economies in the region experienced a major slowdown, including Mexico, Colombia, Venezuela and almost all the economies of Central America and the Caribbean.

The abundance of funding that was reduced in late 2007 coincided with the first phase of the financial crisis in the United States. In mid-2008 started falling commodity prices. But it was the global financial meltdown of September 2008 which triggered the most profound changes, by paralyzing the credit, dramatically increasing risk margins and transforms the drop to a collapse in commodity prices, triggering a deep recession in the world industrialized. Even Latin American economies had maintained a high and even increasing momentum until the third quarter of 2008, as Brazil and Peru, crashed against the wall. The Dow Jones Industrial Index fell 50% from January 2008 to 12.735 to 6.600 in March 2009; this led to a cascading effect for companies, individuals and financial institutions. This situation generated what seemed like a perfect storm where the elements of uncertainty, volatility and pressure to reduce costs were found in a single moment. The crisis that began in the financial services industry passed its borders and he hit manufacturing sector and consumption (Jacobs & Chase, 2011, pp. 144).

One of the main indicators used by the manufacturing sector and consumption to gauge the health of the economy is the JPMorgan Global Manufacturing PMI (Purchasing Manager Index) based on the measurement of 5 sub-indicators with a specific weighting shown follows:

Production level (.25)

New Orders (Clients) (30)

Delivery Provider - (How they are being executed faster or slower) (15)

Inventory (.10)

Level Employees (.20)

With the economic crisis and high volatility of markets, manufacturing companies faced in 2009 with a different reality to the traditional model of planning at the beginning of the year and run mainly by the absence of a statistical model that would allow predicting the behavior of future demand and consider this additional uncertainty driving the market and the violent changes that occurred at the level of consumer behavior (Frazelle, 2002, pp. 198).

The adaptability of supply chains came to the fore as one of the key differentiators of manufacturing companies. As you express what Charles Darwin's general law on the Origin of Species, which extract part of his statement: "Those members of the population with characteristics less suitable (as determined by their environment) are more likely to die. Then those members with characteristics most likely better adapted ...