Buyers warned to keep supply chains lean

26 November 2009

26 November 2009 | Rebecca Ellinor

Purchasers have been cautioned against the temptation to boost inventory prompted by inching improvements in demand.

The Institute of Operations Management (IOM) - the UK professional society for operations management, covering manufacturing, service industries and the public sector - said "benefits generated by reducing stock holdings during the past year should not be squandered by restocking to pre-recession levels".

Instead, the IOM recommends businesses use the advantageous trading conditions to improve supply and understand customer demand better.

Leonie Edwards, IOM manager, said: "Businesses emerging from the recent hard times have inevitably learned new means of efficient operations at relatively low stock levels. Stock is waste - if you know when a customer wants your product then there is the opportunity to deliver without having to carry the added cost of that stock investment yourself. Accurate forecast of demand can yield substantial benefits, lowering costs and improving efficiency."

Meanwhile, according to the Confederation of British Industry's monthly Industrial trends survey for November, manufacturers expect prices of domestic orders to fall marginally in the next three months.
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