Inventory management and planning are top supply chain concerns

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Inventory management and planning top the list of issues keeping supply chain leaders awake at night, according to leading UK end-to-end supply chain consultancy, Crimson & Co (Crimson).

The new research conducted by Crimson through face-to-face interviews with 300 senior decision makers, from over 200 companies, identifies key supply chain issues organisations view as most significant.

The top 10 issues ranked in order of frequency of occurrence are:

  1. Inventory management and planning
  2. Demand management and forecasting
  3. Supply chain network optimisation
  4. Supply chain segmentation
  5. Training and development
  6. Supply chain risk management
  7. Sales and operations planning
  8. Performance improvements in warehouses and RDCs
  9. Material purchase price reductions
  10. Green supply chains 

The interviews were dominated by pressures resulting from the continued economic downturn; along with a combined desire to squeeze every last drop of cost and cash out of the supply chain whilst supporting revenue growth, largely in emerging markets, said Crimson.

Dave Alberts, director at Crimson & Co, said: “For most, the issues included within this top 10 will come as no surprise, especially when it comes to supply chain segmentation, given the recent increased emphasis on this subject. 

“There is general agreement on the need to define and execute different supply chains within each organisation. However, what factors should be used to define the segments and how many you should have, is a subject that remains unclear. This confusion seems to have been partly fueled by poor results from organisations that have relied on customer driven factors to make the segmentation decisions. 

“The subject of supply chain segmentation is clearly on the rise but for most companies it’s not yet real, despite the growing recognition amongst those interviewed who agreed that “one size fits all” supply chains are a thing of the past.”

The majority of those interviewed reported only a moderate reduction in cash-to-cash cycle times, despite an escalated understanding of the importance of cash in these difficult times, and the many initiatives underway, said Crimson. 

Interestingly, whilst green issues made the top 10, the majority expressed a view this topic had slipped down the corporate priority list, Crimson said. 

According to Crimson, the interest in topics such as inventory management and planning, demand management and forecasting, and sales and operations planning were in most cases linked to the need to have more agile responses to changes in customer demands; whilst still achieving higher inventory turns and, as a minimum, maintaining current service levels. 

Dr Janet Godsell from the Supply Chain Research Centre at Cranfield School of Management said the Crimson research provides insight into the challenges facing the supply chain. 

“It reinforces the positioning of the supply chain as a key competitive weapon in enabling companies to reduce costs and increase sales. It highlights the need for excellence in planning (to balance demand and supply) and to provide the visibility of different demand patterns to enable the implementation of segmented supply chain strategy.”