One of the largest drops in the stock market in U.S. history occurred in September 2008. Are companies any better prepared for the next economic recession than they were in 2007? Are their supply chain practices different than just before the last recession? The data in this research suggests the answer is no.
This work examined 100 manufacturing companies to compare their recession-readiness in 2007 (just prior to The Great Recession) to their readiness right now. Ten risky supply chain practices that can harm a company were identified. Eight financial and performance metrics that are indicators of those practices were used, including:
- Profitability
- Revenues
- Variable cost structure
- Revenue per employee
- Number of employee metrics
Each company was given a readiness score in 2007 and in 2018. While we recognize a larger scale study would provide more statistically significant findings, the results of this research with 100 companies offers insight for companies looking to better prepare their organization and supply chain for the next economic downturn. This work did not see a large movement of the metrics or the individual companies in the right direction for recession preparedness. Human nature and the drug of good times are likely too powerful to overcome.
Key Insights:
- Some companies are better off now than before the last recession.
- More are no different than before
- Some companies are worse off today than they were ten years ago.
- The data did not show any overall movement of companies toward less risky supply chain practices.
Please contact Bruce Arntzen: barntzen@mit.edu
or Nima Kazemi: nimakzm@mit.edu
for more information on how to engage.