Supply chain flexibility 'can safeguard operations'
19 April 2012
Posted by Satvir Bhullar
Creating supply chains that are flexible can help companies to prevent problems and deal with difficulties as they arise.
This is the claim made by the Chartered Institute of Purchasing and Supply (CIPS), which has explained managing demand can be difficult, but it is important to take the external environment into account when doing so.
According to Emma Scott, the professional body's Representation Manager, while it is essential for firms to take factors such as weather predictions into consideration when organizing stock levels, it is also helpful to form good relationships with suppliers in order to enhance supply chain agility.
"What you don't want to be in is a position where you're holding lots of stock, which is money and affects profit, and are not able to get rid of it," she added, pointing out that without this flexibility firms such as clothing retailers can struggle, as many items are made a couple of seasons in advance.
Her comments come after Marks & Spencer experienced problems with its stock levels, with shortages across some of its bestselling womenswear lines.
The company admitted to running out of stock and stated this had been because of supply chain management being too tight.
An increasing focus on lean operations has been seen in recent years, but many companies have started to consider how far they can reduce stock levels before business continuity is compromised.
The issue was raised after the Japanese earthquake and tsunami on March 11th 2011 led to severe shortages of automotive parts, causing some firms to suspend production, while global supplies of hard disk drives were adversely affected during the flooding that struck Thailand during last year's monsoon season.
As a result of the Marks & Spencer shortages, the retailer saw clothing sales dip by 0.3 per cent.