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 It is my belief that this outdated method will begin to be phased out in 2013, as forward thinking organisations realise that the only way to achieve a fully holistic view of the supply chain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.
Will Public Procurement Budgets Increase in 2021?
Procurement is more than just a private enterprise. COVID-19 reminded us that sourcing materials is an essential part of the government’s role. Throughout 2022, tiny departments sourced massive amounts of personal protective equipment (PPE), medical supplies, and emergency vaccines and testing kits. Even non-procurement professionals were pulled into the fray, as frantic timelines demanded nothing less.
According to Celeste Frye, co-founder and CEO of Public Works Partners, the crisis brought procurement to the attention of skilled employees who had never considered it. As non-procurement personnel stepped up to help their coworkers, many found that they’d stumbled upon a critical and rewarding job. “Existing public employees have seen the essential nature of the work”, Frye said. “[They’ve] gained some critical skills and possibly [grown] interested in pursuing procurement as a longer-term career”.
Small, Local Suppliers Take Charge
Frye, whose firm helps organisations engage stakeholders and develop long-term procurement strategies, thinks it well worth the effort to open one’s mind to new opportunities. Cooperative contracts, for instance, can help public departments and municipalities save money, time, and effort. By joining together with other towns or cities in the region, public procurement teams aggregate their purchasing power and can drive better deals.
These cooperative contracts have the added benefit of advancing equity. Smaller suppliers that struggle to compete with established firms for government contracts can act as subcontractors, helping big suppliers fulfil bits of the project. Once they get their foot in the door, small, local, and disadvantaged suppliers can then leverage that government relationship to take on additional projects.
Especially as governments start to pay attention to procurement resilience, public procurement departments must expand their requests for proposals (RFPs) to take into account innovative solutions and diverse suppliers. According to Frye, Public Works Partners—a certified female-owned firm—has benefitted from local and state requirements that specify diversity.
Post-Pandemic Funding Swells Procurement Budgets
And the pandemic won’t be the end of it. City governments need to build sustainable energy infrastructure such as solar panels, charging stations, and recycling plants, ensure that masks and medicines are never in short supply, and source new technologies to keep up with cloud and cybersecurity concerns.
Public procurement budgets will likely increase to match demand. As Peter Ware, Partner and Head of Government at Browne Jacobson, explained, “in a non-pandemic world, the [U.K.] government spends on average around £290 billion on outsourced services, goods, and works...anywhere between 10% and 14% of Gross Domestic Product (GDP). Post-pandemic, city procurement will only increase as national governments provide local divisions with emergency funding.
And in truth, government employees might jump at the opportunity. Frye noted that public procurement could give immediate feedback on new programmes: “[Procurement] is where new laws and policies ‘hit the road’ and are implemented”, she said. “Professionals in these fields get the satisfaction of creating real change and seeing quantifiable outcomes of their work”.