Strong consumer demand strains retail supply chain

By Freddie Pierce
Not surprisingly, the Japan Disaster and Thailand Flooding that impacted global trading have had an effect on how supply chain managers manage their sp...

Not surprisingly, the Japan Disaster and Thailand Flooding that impacted global trading have had an effect on how supply chain managers manage their space. These changes have been of paramount importance on the retail chain, which has felt the pressure of strong consumer demand from Black Friday and Cyber Monday this year.

“You saw a lot of demand in manufacturing shift from Japan to Thailand, and most electronic manufacturers have been scrambling throughout the year,” BravoSolution’s VP of Supply Strategy Paul Martyn said. “Companies like Apple are reconfiguring their supply chain in ways that I haven’t seen in my professional career.”

One of the dirty secrets of the electronics supply chain has been the lack of new products in the marketplace, which has put a different type of strain on the retail sector this year, according to Martyn.

“One of the things coming out of the retail sector in general, has been an absence of innovation during the holiday season,” Martyn explained. “I can’t remember holiday seasons like the last couple where there’s been an absence of that new thing that people have to have.”

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That lack of innovation, particularly in Apple’s case, could be at least partially attributed to the lack of competitors in the market. Apple doesn’t have legitimate threats to its iPad tablet computers, given the flameouts of BlackBerry’s PlayBook and other Apple competitors.

Martyn took a different approach to describing Apple’s supply chain behavior, however.

“You could look at Apple’s behavior in cutting orders on new parts as not being able to cover all the parts for their products, but they’ve also got a lot of excess inventory, and they may be wanting to whittle down their inventory,” Martyn said.

While Apple’s behavior has been strange, the good news for the retail supply chain has been a buoyed demand within the United States. While there’s still considerable doubt as to what will happen with Europe’s growing financial crisis, the global manufacturing and retail sector has had a bounce-back year this holiday season.

“Lead times and inventories are showing bullish qualities in the U.S.,” Martyn said.

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