Supply Chain Management is complex. With each quarter, economic issues – both global and domestic – make “business as usual” anything but usual. Today, we’re looking at three big items economists are keeping an eye on in the fourth quarter of 2015.
Current global economic volatility is creating demand for more sophisticated supply chain management systems. Economists expect every link in the supply chain – from manufacturing to consumption – to go through another wave of automation via technology.
After an economic slowdown, when companies go through layoffs, they typically come back with as much automation as possible to ease the pressure of rehiring as many people as they had before. It’s a phenomenon seen with every recession since about 1979. With improvements in automation, it’s become easier in some industries. It doesn’t hold so much for trucking, but many U.S. businesses have gone through this process of automation after an economic downturn.
Inventory Control / Rebalancing
In many ways, 2015 has been the year Inventory Control got out of control. Supply chain managers have been dealing with overstock since late-Q2, which will impact decisions and strategies throughout Q4. Look for a renewed desire to reign in overstock situations and to hone just-in-time inventory practices.
That could also include reusing and dusting off old re-balancing strategies (store-to-store and DC-to-DC transfers, etc.). It will also be interesting to see the affect this could have on how online retail sales fulfillment gets adjusted to help deplete overstocks.
Supply chain managers may be willing to revisit supply chain processes to build in more transit time in order to take advantage of lower cost modes of shipping. Others will experiment with high-speed replenishment strategies to save on inventory carrying costs, which are currently out of control (as mentioned above).
Those are just three big items to think about this quarter. There are plenty more. What are some of the issues or trends affecting your business?