New Year, new supply chain

In today's uncertain environment, INFORM's Karsten Horn explains how it has become increasingly important for businesses to guarantee that when a customer wants to make a purchase, their supply chain is efficient enough to ensure that the item they want is available
 Now is the time to re-evaluate supply chain management

Written by Karsten Horn, Director of international Sales for the Inventory and Supply Chain Division at INFORM

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Out of stock, out of touch

In today’s ever increasing marketplace, if a business can’t fulfil its customers’ requirements they are likely to turn to the nearest competitor who can sell them the item immediately. The threat of not being able to meet demand is therefore a growing concern within the supply chain.

However, the current economic environment is forcing many firms to drastically cut stock levels. For example, in the summer of this year, reports showed the manufacturing sector drastically cut back stock orders due to the continuing decline of its industry.

Some businesses have taken this philosophy too far and have stripped away strategic buffers which protect the supply chain from unforeseen events which have a major impact on (global) supply chain operations.  Companies that take stock cutting measures to extreme levels are leaving themselves at risk of not being able to fulfil normal orders, when factors cause a disruption in the supply chain.

Supply chain stomach ache

With the globalisation of supply chains, ever-changing environmental factors such as natural disasters, the upheaval of financial markets and commodity prices are difficult to avoid. The ensuing impact on availability cannot go unnoticed. Therefore, businesses must take a far more comprehensive view of the supply chain in order to better understand, anticipate and plan for a changing environment.

However, in my experience, many organisations continue to rely on legacy systems or ‘gut feeling’ to identify trends and make supply decisions. It is my belief that this outdated method will begin to be phased out in 2013, as forward thinking organisations realise that the only way to achieve a fully holistic view of the supply chain and to manage it more effectively is to adopt intelligent process management systems. Businesses can use this intelligence to take immediate action to ensure optimal stock levels are reached and availability is maximised.

By using these intelligent tools to effectively optimise inventory, firms can ensure they maintain availability and service levels, whilst also protecting liquidity as optimal inventory levels can be reached, even in volatile markets. 

Utilising the benefits of technology for inventory optimisation becomes even more imperative when working within environments that can change at speed, which may leave businesses struggling to meet availability requirements.A study we conducted for example showed that 83 percent of respondents advocate the importance of good forecasting tools to bring security to unpredictable markets.

Modernising the supply chain

As businesses cast their eye towards the New Year, I believe supply chain management will become an ever pressing focus for businesses across the board.

Proactive organisations will respond with more co-ordinated approaches to supply chain management, adopting technology that enables them to quickly and effectively manage operations and gain a greater perspective over the entire supply chain.

Inventory management software tools will aid this process, allowing for reduced planning effort, abetter overview of consumer buying patterns and coordinated management of entire the supply chain network. Organisations will utilise these technologies to obtain vital information that will enable them to adjust quickly to reflect market changes, ensure availability and enablecustomers’ expectations to be met – adding value in the process.

New Year, new supply chain

The sophistication of supply chain management will continue to grow as businesses face increasingly difficult conditions and look to balance lean supply chains while maintaining availability and high service levels.

Companies will also be forced to look at all activities through the lens of liquidity; exploiting technology to reduce stock and procurement expenses while freeing up additional liquidity at the same time.

Although this is a careful balancing act, it is vital to guarantee availability, and maintain optimal customer service levels. By ensuring that theoptimal inventory is held in the right place at the right time – customer satisfaction can be guaranteed.

Now is the right time for businesses to re-evaluate their approach to supply chain management. Those who successfully implement advanced intelligent inventory planning tools will begin to make the supply chain work for them; reaping the rewards of competitive advantage throughout the New Year.

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