Taking stock of availability
Written by: Karsten Horn, director of international sales for the inventory and supply chain division at INFORM
In today’s uncertain environment, it has become increasingly important for businesses to guarantee that when a customer wants to make a purchase, their supply chain is efficient enough to ensure that the item they want is available.
If a business can’t fulfil its customers’ requirements, they are likely to turn to the nearest competitor who can sell the item immediately. The threat of not being able to meet demand is therefore a key concern within the supply chain.
The current economic environment is forcing many firms to drastically cut stock levels. For example, in the summer of this year, reports showed the UK manufacturing industry drastically cut back stock orders due to the continuing decline across a range of sectors, a factor which is taking the toll across the global market.
Some businesses have taken this philosophy too far and have stripped away strategic buffers which protect the supply chain from risk factors. Companies that take stock cutting measures to extreme levels are leaving themselves at risk of not being able to fulfil normal orders if there is a disruption in the supply chain.
Supply chain stomach ache
Ever-changing environmental factors such as natural disasters, the upheaval of financial markets and commodity prices are difficult to avoid. The ensuing impact on availability cannot go unnoticed. Therefore, businesses must take a far more comprehensive view of the supply chain in order to better understand, anticipate and plan for a changing environment.
However, in my experience, many organisations continue to rely on legacy systems or ‘gut feeling’ to identify trends and make supply decisions. It is my belief that this outdated method will begin to be phased out in 2013, as forward thinking organisations realise that the only way to achieve a fully holistic view of the supply chain and to manage it more effectively is to adopt intelligent process management systems. Businesses can use this intelligence to take immediate action to ensure optimal stock levels are reached and availability is maximised.
By using these intelligent tools to effectively optimise inventory, firms can ensure they maintain availability and service levels, whilst also protecting liquidity as optimal inventory levels can be reached, even in volatile markets.
Utilising the benefits of technology for inventory optimisation becomes even more imperative when working within environments that can change at speed, which may leave businesses struggling to meet availability requirements.For example, a recent study by INFORM revealed that 83 per cent of respondents advocate the importance of good forecasting tools to bring security to unpredictable markets.
Modernising the supply chain
Supply chain management will become an ever pressing focus for businesses across the board. Proactive organisations will respond with more co-ordinated approaches to supply chain management, adopting technology that enables them to quickly and effectively manage operations and gain a greater perspective over the entire supply chain.
Inventory management software tools will aid this process, allowing for reduced planning efforts, abetter overview of consumer buying patterns and coordinated management of entire the supply chain network. Organisations will utilise these technologies to obtain vital information that will enable them to adjust quickly to reflect market changes, ensure availability and enablecustomers’ expectations to be met – adding value in the process.
New Year, new supply chain
The sophistication of supply chain management will continue to grow as businesses face increasingly difficult conditions and look to balance lean supply chains while maintaining availability and high service levels.
Companies will also be forced to look at all activities through the lens of liquidity; exploiting technology to reduce stock and procurement expenses while freeing up additional liquidity at the same time.
Although this is a careful balancing act, it is vital to guarantee availability, and maintain optimal customer service levels. By ensuring that the optimal inventory is held in the right place at the right time – customer satisfaction can be guaranteed.
Now is the right time for businesses to re-evaluate their approach to supply chain management. Those who successfully implement advanced intelligent inventory planning tools will begin to make the supply chain work for them and will reap the rewards.
EU and US agree end to Airbus-Boeing supply chain tariffs
The EU and US have agreed to resolve a 17-year dispute over aircraft subsidies, suspending tariffs on billions of dollars' worth of goods that have plagued procurement leaders on both sides of the Atlantic.
Under an agreement reached by European Commission Executive Vice-President Valdis Dombrovskis and US Trade Representative Katherine Tai on Tuesday, the tariffs will be halted for a period of at least five years.
It will bring an end to punitive and disruptive levies on supply chains that have little to do with the argument, which became embroiled in the trade battle. Businesses on both sides of the dispute have been hit with more than $3.3bn in duties since they were first imposed by the US in October 2019, according the EC.
The US imposed charges on goods upto $7.5bn in response to a World Trade Organisation ruling that judged the EU’s support of Airbus, its biggest aircraft manufacturer, unlawful. A year later in November 2020, the EU hit back. The WTO found the US had violated trade rules in its favourable treatment of Boeing, and was hit with EU duties worth $4bn.
In all the tariffs affected $11.5bn worth of goods, including French cheese, Scotch whisky, aircraft and machinery in Europe, and sugarcane products, handbags and tobacco in America. Procurement leaders on both sides of the fence were forced to wrestle with tariffs of 15% on aircraft and components, and 25% on non-aircraft related products.
Boeing-Airbus dispute by the numbers
- The dispute began in 2004
- Tariffs suspended for 5 years
- $11.5bn worth of goods affected by tariffs
- $3.3bn in duties paid by businesses to date
- 15% levy on aircraft and 25% on non-aircraft goods suspended
Both sides welcome end to tariffs
European Commission President Ursula von der Leyen branded the truce a “major step” in ending what is the longest running dispute in WTO history. It began in 2004.
“I am happy to see that after intensive work between the European Commission and the US administration, our transatlantic partnership is on its way to reaching cruising speed. This shows the new spirit of cooperation between the EU and the US and that we can solve the other issues to our mutual benefit,” she added.
Both aircraft manufacturers have welcomed the news. Airbus said in a statement that it will hopefully bring to an end the “lose-lose tariffs” that are affecting industries already facing “many challenges”. Boeing added that it will “fully support the U.S. Government’s efforts to ensure that the principles in this understanding are respected”.
The US aerospace firm added: "The understanding reached today commits the EU to addressing launch aid, and leaves in place the necessary rules to ensure that the EU and United States live up to that commitment, without requiring further WTO action."
This week’s decision expands upon a short-term tariff truce announced in March this year. The EC says it will work closely with the US to try and further resolve the dispute, establishing a Working Group on Large Civil Aircraft led by each side’s trade minister.
Airbus last month signalled to suppliers that post-pandemic recovery was on the horizon, telling them to scale up to meet a return to pre-COVID manufacturing levels. “The aviation sector is beginning to recover from the COVID-19 crisis,” said Airbus chief executive Guillaume Faury, adding that suppliers should prepare for a period of intensive production “when market conditions call for it.”