We've completed a fairly informal survey among several hundred prospects over the last few months. We're getting a consistent message from them: Revenue is flat or down, but labor costs are up.
Of course, we ask them "Why?"
The answers coincide with the market dynamics in supply chain execution that we've been tracking for years. Companies are tightening inventory levels. So they are ordering less, more frequently. In terms of supply chain execution, they may be picking less orders but they are performing more receipts and executing more put aways. In some cases, especially in wholesale distribution, their customers are ordering less - but more frequently. This drives order count up - but with less lines per order. These things just prove that whatever the economic conditions are, the trends are inexorable. To get our Market Dynamics White Paper, please click here.
Before the economic woes hit, we reported on the NYSE 2009 CEO survey last August. The net of the report was that "Operational Efficiency" was the most important internal factor determining profitability for 2009. It is apparent that this is still the case.
But it's also apparent that few companies are presently willing to actually do something about operational efficiency, despite their experience with costs remaining high while revenue diminishes and with clear ROI opportunities.
Perhaps the NYSE report missed the fact that "Fear" is actually more important to many companies than "Operational Efficiency".
