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The crisis still controls the companies: Balancing working capital and stock levels is key supply concern

Following the recent economic crisis, the key concern for materials management is balancing working capital and levels of supply, according to research by INFORM. The results also highlighted that 75 per cent of materials management professionals believe lacking inventory impedes growth.

The research, based on interviews of 117 decision makers in the industry, was conducted to pinpoint the key materials management problems in recent months. The results demonstrate that eight out of ten companies see supplier management as a weak spot, particularly in relation to replenishment lead times and adherence to delivery dates. In addition, 83 per cent of respondents advocated the importance of forecasting tools in counter measuring unpredictable markets.

Cathy Humphreys, UK country manager at INFORM, says: "During the economic crisis, freeing up funds through releasing working capital and ordering inventory just in time, has been critical to the survival of many companies. However, some companies take the lean philosophy too far and strip away strategic buffers which protect the supply chain from unforeseen events. We have observed this in recent months in particular through extreme natural events, such as the volcanic ash cloud and Japanese earthquake and tsunami, which have the potential to cause inventory to be unavailable."

With lacking provisions being seen as a significant factor in hindering growth, Karsten Horn, director international sales of the Materials Management Division at INFORM, believes it is imperative that companies are adequately prepared to manage resources efficiently: "Planning methods such as consignment stocking can enable a business to operate with lower inventory levels and therefore lower tied-up capital. As the global economic recovery begins, though, businesses must develop more accurate requirement plans which conform to lean principles as well as buffering the supply chain from potential changing circumstances."

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