Prices protest fuels supply rethink

4 October 2000
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05 October 2000 | Cathy Hayward

"Just-in-time" manufacturing is under threat as evidence emerges of many UK firms stockpiling fuel to guard against a repeat of the recent fuel crisis.

Several major firms have rethought their approach to holding stocks after last month's protest which brought many production lines to a standstill.

Car-maker Land Rover imported fuel from Ireland to keep its production lines running, while Honda UK had to shut down its Swindon plant. Land Rover now has contingency plans for future fuel shortages.

Logistics company TNT has increased diesel storage by 20 per cent, to three million litres - two weeks' reserve. "By the end of the crisis, we were left with two days' fuel and had to co-load to fulfil urgent deliveries," said a TNT spokesman. "We are increasing our fuel stocks to prevent this happening again."

Rival UPS has increased reserves from seven days to three weeks, but it plans to reduce stocks when the crisis ends.

Panic buying caused supermarkets to increase deliveries of staples to match customer demand. Safeway is considering increasing fuel storage capacity. Other retailers could follow suit.

Firms with no reserves are asking suppliers to stockpile fuel to guarantee deliveries. Suppliers for Carlsberg Tetley, Boots and Marks and Spencer have agreed to keep stocks high.

But experts say that firms risk damaging the economy. "It's rational for firms to stockpile fuel after such a crisis," said Brian Jeffery, senior lecturer in IT and supply chain management at the University of Coventry.

But he warned against maintaining high fuel levels. "Stockpiling is fine so long as firms go back to their normal storage levels once the situation changes, otherwise they risk becoming uncompetitive," he said.

The trend is unlikely to be long-term or extend to stockpiling goods, said the Freight Transport Association. "Shop design is dependent on just-in-time deliveries, minimising storage areas," said a spokesman.

"It's a blip," agreed CIPS head of policy Melinda Johnson, who said some firms had overreacted. "Stockpiling contingency plans are only needed for business-critical items, not the entire supply chain."

The protesters' 60-day deadline for the government to reduce fuel tax is unlikely to be met, increasing the likelihood of further blockades and stockpiling.

SMoct2000

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