ISM Silicon Valley's List: Inventory Mgt

• One of the top challenges supply chain executives list in any survey is lack of visibility.  Whether it is the status of orders, location of shipments or quantity of inventory, managers struggle to have the latest information about goods in the supply chain.  The lack of visibility contributes to a significant amount of inefficiency and waste.  Assuming the worst, most organizations stock buffer inventories to overcompensate for any potential supply shortages they may be unaware of.  The result is that more inventory than necessary is in the supply chain tying up working capital and inflating corporate balance sheets.

• IBM Unveils Smarter Commerce Software and Services Offerings
• • Supply Chain Planning & Execution -- Through the integration of WebSphere Commerce and Sterling Order Management, IBM's Smarter Commerce enables businesses to better optimize inventory investments by providing enhanced visibility and intelligence around current inventory positions and sourcing options, resulting in improved fulfillment rates at a lower cost.
• For more information, visit: http://www.ibm.com/press/smartercommerce.

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• Economic uncertainty, fluctuating fuel prices, increased safety and social regulation, escalating customer expectations, globalization, improved technologies, labor and equipment shortages, a changing transportation service industry…today’s managers are faced with an array of challenges and opportunities that contrast dramatically with those of a decade ago.
• Regardless of external conditions, however, managers must encourage their firms to avoid the temptation of making transportation decisions with an eye toward short-term gain. Rather, they need to view the total cost and total value provided by the function not only in relation to operating expenses but also in terms of the impact on customer service and inventory reduction. The influence on total economic value added is significant.

• Supply chain management is adopting cost cutting, optimization, speed of deployment, agility and real-time process information and automation, with 21st century software leading the way—and as the economy begins to rebound, companies are starting to spend on software again.
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  “Companies are going to stay focused on lowering the costs of doing global business at the same time that they expand their sources of supply and volume of product—and they’re going to use software to do it,” says Collins. “We’re also seeing emerging market companies in countries like India, China, and Brazil that are beginning to bring product into consumer markets from outside suppliers. Regardless of where companies are operating, they are rethinking how their supply chains work. Some are opting to go to regional supply chain depots to hold parts. In this way, they can position more inventory closer to customers, and have fewer shipments. This all depends on the nature of the product and the cost of freight.”

• The economically driven business actions over the past two years dramatically reduced inventories in the supply chain.  At the time, these cuts were, for many, a stay-in-business strategy.  However as the market turns towards recovery, this same business sustainability decision may be creating supply chain risk. 

• It will come as no surprise to CFOs that many Supply Chain Managers report directly to the CFO. After all, to a chief financial officer, inventory is often a line item on the balance sheet . In many industries (particularly retailing and manufacturing) ratios such as inventory turns are critical factors on the income statement and provide the CFO with an overall view of how much inventory is held across the company’s supply chain.