Economist Bill Conerly, in Forbes.com,  analyzed the GDP change from Q1 -2.1 percent to Q2 +4.0 percent to find a 2.9 percent swing in inventory build up between the quarters. Inventory levels are a key measure of the digital maturity of your supply chain. 

According to Conerly, "For businesses, the buildup in inventory is a threat. Inventories can be sold, which is good. They can also become obsolete or “walk out the door” through employee theft. What is sad is that many businesses could be trimming their inventory levels, but are not doing so."

On this topic, Rick Pay, supply chain strategist observed "Most companies have significant opportunities to cut inventory.” He added that he saw many opportunities to dramatically reduce inventory while improving customer service levels. “Many companies find themselves at the industry average for inventory turns and customer service. Top tier companies often achieve inventory performance of five to eight times that of the industry average.”

Conerly concludes that two lessons emerge from this discussion:

  1. All companies, whether they carry inventories or not, should prepare for business cycles accentuated by inventory swings.

  2. Companies that hold inventories should reevaluate their practices with an eye to trimming inventory levels now.

Are you measuring your contributions to the digital value chain? You should be, it is a target rich environment. 

Economist Bill Conerly, in Forbes.com,  analyzed the GDP change from Q1 -2.1 percent to Q2 +4.0 percent to find a 2.9 percent swing in inventory build up between the quarters.  Inventory levels are a key measure of the digital maturity of your supply chain. 

According to Conerly, "For businesses, the buildup in inventory is a threat. Inventories can be sold, which is good. They can also become obsolete or “walk out the door” through employee theft. What is sad is that many businesses could be trimming their inventory levels, but are not doing so."

On this topic, Rick Pay, supply chain strategist observed "Most companies have significant opportunities to cut inventory.” He added that he saw many opportunities to dramatically reduce inventory while improving customer service levels. “Many companies find themselves at the industry average for inventory turns and customer service. Top tier companies often achieve inventory performance of five to eight times that of the industry average.”

Conerly concludes:

Two lessons emerge from this discussion:

  1. All companies, whether they carry inventories or not, should prepare for business cycles accentuated by inventory swings.
  2. Companies that hold inventories should reevaluate their practices with any eye to trimming inventory levels now.

Are you measuring your contributions to the digital value chain?  You should be, it is a target rich environment. 

 

Read the source article at forbes.com

Michael Lee is the Managing Director of Quality Deployment. He can be reached at insights@qdbve.com.

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