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Tuesday, July 22, 2014

Sourcing and Inventory Are Among Top Short-Term Supply Chain Concerns

Stuart Miles intersection confusion

Credit: Stuart Miles at FreeDigitalPhotos.net

A report released on April 30 by Tompkins Supply Chain Consortium finds considerable overlap among five supply-chain areas as both short-term and long-term challenges cited by respondents.

While Tompkins Supply Chain Consortium (TSCC) did not detail how the report’s findings define business conditions at present, the results suggest that for many companies involved in the manufacturing, distribution, and procurement of goods, issues involving demand, sourcing, product delivery, personnel (i.e., talent, people, and labor), and global business are ongoing challenges that require constant planning and updates.

TSCC is the benchmarking unit of Tompkins International of Raleigh, N.C. In the report, titled Biggest Challenges for Today’s Supply Chains, TSCC surveyed senior executives in five industries, with the most representation from manufacturing (47.4 percent), retailing (28.9 percent), and wholesale/distribution (13.2 percent). The others were 3PL (third-party logistics) and private equity, at around 5 percent each.

After evaluating the topics of most concern to executives, TSCC found that costs, defined by industrial and commercial respondents as total cost productivity, railroad pricing, and cost reduction, were the top short-term and long-term concerns.

The number-two short-term concern was working capital, which relates to inventory balancing, increasing working capital turns, and inventory reduction. And the number-two long-term concern was implementation of software and technology.

Personnel and the global economy were numbers three and four, respectively, in both categories.

Rounding out the top five were software and technology as short-term concerns and distribution efficiency as a long-term concern.

Other short-term challenges were demand planning (sixth) and then supplier relations and compliance (seventh). The sixth long-term concern was supplier relations and compliance, while the seventh was legislation and regulation.

With the exception of working capital and demand planning, which are more likely to be affected by monthly, quarterly, and seasonal forecasts and legislation and regulation — typically longer-term concerns — both categories show that immediate and long-term activities are intersecting sooner on the planning horizon.

Most managers would agree and say they are already adjusting planning and sourcing strategies to harmonize short-term and long-term goals as much as possible, while securing the resources and capital for both.

Those who move aggressively in this area will see gains. Those who do not will be working harder to make up lost ground.

 

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