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Is the Supply Chain Being Broken? What Are the Current Trends?

written by: Jean Scheid • edited by: Ronda Bowen • updated: 4/30/2011

The business world is becoming something different in the 21st Century, and for those companies relying on supply chain management to maintain inventory levels, there are some trends and changes that will affect how your chain management process works. Jean Scheid explains.

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    Inventory and Supply Chain Management

    Supply Chain There are many changes impacting supply chain management in this ever-changing global economy. From natural disasters to manufacturer halts, inventory and supplies from certain vendors may not be readily available which will harm organizations utilizing the supply chain process.

    Whether you are using the Just-In-Time (JIT) or the Min/Max methodology, both are subjected to vendor shut downs, delays and other factors. Beyond that, there are other common factors to beware of to maintain adequate and relevant inventory.

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    Trends to Watch

    Changes Impacting Supply Chain Management Some of the trends and changes that are having a direct impact on supply chain management include:

    Vendor Competition – Vendors are more competitive than ever because all companies need to make a buck to meet overhead expenses. To ensure realistic inventory levels, organizations need to use a vendor selection process in more of a request for proposal format to find the best vendors.

    Lack of Vendors – On the other side of vendor competition is the growing lack of vendors due to manufacturing shutdowns, company mergers, and natural disasters that have forced some vendors and supplies to close down and wait out repairs to equipment and facilities.

    Cash Flow – Chain supply management means buying inventory when you need it (JIT) or keeping a balanced level of pertinent inventory on-hand (Min/Max). With economies in deep trouble, businesses are finding it harder to manage cash flow to purchased needed inventory or supplies using this methodology.

    Types of Vendors – Green technology is upon us and it is affecting suppliers as well. As vendors search for ways to make their products and shipping containers greener, costs may rise or fall depending on efforts achieved. The general public may be more impressed with a company utilizing these types of vendors.

    Global Challenges – Companies need to look at the logistics of where they are obtaining inventory. Is the global challenge better and more cost effective? Or, do companies stick with products made in the United States. Because almost everything made these days does indeed include some sort of import element, which overseas suppliers will offer the best bang for the buck? Inventory managers need to analyze overseas inventory costs and devise plans to achieve the right inventory at the right price. The price of labor to produce supplies overseas is also hot topic consideration.

    Inventory Controls – Believe it or not, inventory control is still a change impacting supply chain management because of the lack of inventory controls in place. Inventory can make or break your business so if you haven’t implemented good control and inventory tracking—you need to now.

    Technology – Almost everyone is “connected” and via mobile apps, laptops or the World Wide Web, it’s now possible for real-time pricing options and inventory resources in a snap. Expect more supply chain management software and best practices to help you make quick and fast decisions.

    Stock Orders – Vendors that offer discounts on designated stock order days has been successfully used in the automotive industry, however, expect it to become more popular in other manufacturing areas.

    Consumer Wants – Customer relationship management (CRM) is a hot issue these days and more companies are recognizing it’s not so much the price, but the customer experience that is defining their inventory.

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    Final Thoughts

    Inventory Control These changes impacting supply change management are only a few if one views the “new” economy as a “global” economy. Breaking away from trusted and steadfast vendors is happening now due to slow financial times and actual cash available for needed inventory.

    Smart inventory managers will implement all the tools they can including allowing vendors to battle it out, using supply chain software and beefing up inventory control systems to ensure what’s on the shelves is what is needed, not picked for its price or variety.

    Variety may be the spice of life, but when it comes to inventory and supply change management, know what you need and when you need it and above all, reanalyze your systems to ensure your inventory levels are not out of control and do indeed comply with the methodology of supply chain management.

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    References

    Supply Chain Digest - http://www.scdigest.com/assets/newsViews/08-01-23-1.php

    21st Century Supply Chain, Top 3 Issues Impacting Supply Chain Management - http://blog.kinaxis.com/2007/05/top-three-issues-impacting-supply-chain-management/

    Image Credits:

    Chain - Wikimedia Commons/Toni Lozano

    Conveyor Belt - Wikimedia Commons/Share Alike License

    Inventory Control - Wikimedia Commons/Matte