Supply Chain Trends and Issues: Our Weekly Feature Article on Important Trends and Developments in Supply Chain Strategy, Research, Best Practices, Technology and Other Supply Chain and Logistics Issues  
  - Aug. 29, 2012 -  

Supply Chain News: How Do Companies Perceive Opportunities to Reduce Inventories Across the Supply Chain

Few Companies Believe they are Excellent at Managing Inventories Network-Wide; What are the Top Barriers to Improved Performance?

  by SCDigest Editorial Staff  

Last year, our Chief Supply Chain Insights research arm issued an excellent report on better managing network-wide inventories.

That report was based in part on a major survey of inventory practices and perceived opportunities in improving network-wide inventory management, based on respondes from over 300 SCDigest readers.

SCDigest Says:
Said one electronics industry respondent: "I think many of us have supply chain and inventory management technology that was built for a different time, or at least a different level of understanding

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The full report was made available last year, and it can be downloaded here: Five Strategies for Improving Inventory Management Across Complex Supply Chain Networks

It turns out we never published a separate article with some highlights of the findings, and think it is not too late to do that here in Q3 2012.

As noted in the report, a variety of factors are combining to increase supply chain network complexity for most companies. Those factors include:

• Increased global scope and reach that must be managed

• Increasing virtualization and resulting loss of visibility and control

• Challenges resulting from multi-channel go-to-market strategies

• Shrinking product lifecycles not only in well-recognized areas such as high tech and electronics but in virtually every manufacturing sector.

Multi-channel commerce

That overall complexity of course increases the challenges of managing inventory effectively across the network.

Among the many survey questions and charts, CSCO Insights asked respondents how mature they thought their companies were in terms network-wide inventory management processes.

The results are about what we might have expected: just 8.5% said their current processes have reached an "excellent" level, though 27.5% said their processes were "good."

Importantly, however, that leaves just over 60% said their current processes were average or worse - meaning the majority of companies have a lot of work to do to tackle the network inventory problem holistically.



Source: CSCO Insights

The story was much the same when it comes to the maturity of technology enablement companies have reached to manage complex network inventories.

Here, just 6% of respondents put themselves in the "excellent" group, and 24% in the "good" category, both numbers down a few percentage points from the process maturity perspective; some 70% rated themselves as just average or worse.

Said one electronics industry respondent: "I think many of us have supply chain and inventory management technology that was built for a different time, or at least a different level of understanding. We need something new to manage this challenge effectively today."


Another respondent added that "There is technology to do this well, but it can be hard to implement, and not many have done it."

(Supply Chain Trends and Issues Article - Continued Below)



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The survey later asked respondents what the larges barriers were they saw to improving network inventory management.


Those results are shown in the chart below. Some things stand out. For example, senior management vision/focus is not perceived to be an issue for most companies; nearly 42% rated it as a low barrier, and 66% combined rated it as either low or medium. The annual planning process and supplier collaboration challenges also rated fairly low as barriers. On the other hand, 56% of respondents cited their inability to optimize the network holistically as a high barrier.



Other areas receiving high scores included lack of technology integration, having internal functional silos, misaligned metrics (related, no doubt, to functional silos) and demand volatility (as always seems to be the case).

Finally for this article, CSCO Insights asked companies where their companies plan to invest to improve network inventory management. As shown on the chart below, technology scored high, with improving supply chain visibility (41.7%) and general enhanced inventory management/planning technology (also 41.7%) listed as areas many respondents said they were quite sure to make investments over the next 2-3 years.

There is a lot more data in the full report. That includes not only more survey responses, but a discussion of five smart ideas companies might consider to get a better handle on supply chain network inventory.


Does any of this survey data surprise you? What steps or investments are you taking to improve network inventory management? Let us know your thoughts at the Feedback button below.


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