Supply chains stand up to millennium bug test

27 January 2000
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27 January 2000 | Elizabeth Bellamy

Most of Britain's supply chains, except those within the automotive and pharmaceutical sectors, were well prepared for millennium bug hitches, a supply chain academic has claimed.

But it will be another few weeks before analysts know the true extent of New Year stockpiling, said Richard Wilding, logistics and supply chain management lecturer at Cranfield School of Management.

The CIPS purchasing managers' index on manufacturing for December found a significant portion of those surveyed had chosen to build up stocks of finished goods to prepare for technical problems. According to Y2K-compliance body Action 2000, early reports also revealed some stockpiling of office products.

"We haven't heard of any problems yet," said Ben Skelton, Action 2000's planning manager, "but firms will be working hard to patch over the visibility of any difficulties."

Wilding said that some companies had suffered more from efforts to install Y2K-compliant software than they probably would have done if the bug had hit.

First-tier suppliers guarding against possible supply interruptions had contributed to stockpiling in the automotive industry. In the pharmaceutical sector, the critical nature of healthcare supplies had contributed to the build-up of stock.

Mark Henderson, European planning and logistics manager for pharmaceutical and domestic cleaning products company Reckitt Benckiser (RB), said the firm had seen increased millennium orders for its flu relief product Lemsip. In anticipation of the recent flu epidemic, antiseptic and painkiller orders were also up.

"With these types of products, you can't afford to take risks," Henderson said. RB is a supplier to the consumer market and hospital wholesalers.

Stockpiling has the potential to "screw up the economy" over the next few months, said Wilding. Suppliers whose unsophisticated forecasting systems did not allow them to predict a drop in demand after receiving larger than usual New Year orders would suffer, he added, as would the bottom line of firms that were forced to pay higher than usual warehousing costs.

He warned firms that had stockpiled to take a controlled response. "Slowly ramp down orders and keep suppliers informed," he advised.

SMjan2000

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