Food and grocery companies believe lead times will fall over the next five years as retailers look to cut inventory levels, according to new research unveiled today (8 November 2011) by IGD Supply Chain Analysis.
A survey of over 300 retailers and manufacturers across the world, found:
- Six out of 10 (61% of) retailers think lead times will reduce by up to one day over the next five years
- More than half (55%) of manufacturers believe lead times will fall by up to one day over the same period
- 54% of retailers think order frequency will increase by 2016, compared to 67% of manufacturers
Tarun Patel, head of Supply Chain Analysis, IGD, said: “Manufacturers and retailers are more focused on responding to customer and shopper needs. They are investing in operating processes and systems that enable supply chains to be more responsive and flexible.
“Retailers have invested in more sophisticated systems that help them better plan for weather changes, and the impact of both promotions and seasonal events, like the football World Cup or Mother’s Day. This allows retailers to be more precise about what stock they need from suppliers – it’s now moved from just in case, to just in time.
“Retailers are cutting their inventories by holding stock in fewer locations, with each serving more stores. They are requiring more categories to be ‘stockless’ – holding products for less than 24 hours before they are needed in-store. As a result, they are working with suppliers to shorten lead times to now include categories outside fresh produce in the stockless process.
“The shortening of the supply chain process means it’s more important than ever for retailers and suppliers to collaborate. IGD helps manufacturers and retailers to work more closely together through its research, sharing of best practice and developing practical solutions for on shelf-availability, sustainable distribution and retail packaging.”