Recent interruptions to the supply chain, from the pandemic to the Suez Canal blockage and the closure of the Yantian terminal in Shenzhen, should not be viewed as outlier events but as part of a growing trend of supply chain instability.
So says Taulia in its recent Profitability through Inventory Management white paper, which highlights numerous events over the past 18 months that point to the increasing fragility of global supply chains.
These range from geopolitical developments, such as Brexit and tensions between the US and China, to semiconductor shortages and the spectre of inflation, all of which are exacerbating supply chain uncertainty and impacting costs in shipping and international trade.
Erik Wanberg, Head of Inventory Management at the fintech provider of working capital solutions, says that these problems need to be expected and addressed through agile supply chain management, rather than costly measures like holding higher levels of safety stocks.
He said: “Today, balancing the competing priorities of holding just enough inventory to avoid production outages while reducing inefficient capital and storage costs is a crucial part of supply chain management and one that shouldn’t be overlooked. By reducing the working capital tied up in inventory, while maintaining the same level of sales, companies can drive a higher return on capital. But in order to do this, they need new solutions that can both increase their visibility through better data and bring improved access to efficient capital. As with many things, technology will provide the greatest opportunity for supply chain transformation and competitive advantage”.
The report can be downloaded from www.taulia.com