Senior level supply chain managers won't be surprised by the findings of a recent survey conducted by the Institute for Supply Management (ISM). Seventy-seven percent of the respondents said their organizations planned reductions in capital spending in 2009. Of those companies, 35 percent said the drop would be substantial, while 42 percent expect slight reductions. Reasons cited were varied, yet all were connected in some way to current economic conditions. Of those anticipating budget cuts, 79 percent of executives blamed one or more of five factors: worsening sales prospects, economic uncertainty, the high cost of financing, difficulties in obtaining financing, and the high cost of inputs.
More than 42 percent of ISM members surveyed reported plans to reduce production capacity. More than 90 percent of those companies expect the reduction to be temporary; the rest see permanent cuts. Reduced demand for products and services was the number-one factor cited in prompting those decisions.
The survey was conducted in late November and early December 2008, the onset of the current crisis. ISM received 304 completed responses from its membership. Fifty-seven percent named manufacturing as their primary line of business, the group said.
