Kudos to Procurement Leaders for a great article about how current inventory numbers are telling a risky story for the potential of inventory shortages, stock-outs and overall supply risk than appears on the surface. The author notes that, “with the fog that is hanging around the market at the moment … companies that are more risk-averse have shown a tendency to retain liquidity and keep capacity and inventory down.” Put another way, the challenge, of course, is that companies are hoarding cash and ordering less at all levels of the supply chain. The obvious risk in this scenario is that any changes in demand or supply at one tier in the supply chain can have cascading multiplier effects elsewhere in the chain based on current inventory levels, capital availability, etc. What’s a potential solution to the issue? My Chicago colleague Paul Martyn, formerly of CombineNet and now at BravoSolution is quoted in the article, and thinks he has an answer in the form of sourcing optimization. And I think he might be onto something here if we all stop to think about how we could use optimization versus how it’s typically put into practice today…
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