Shippers and retailers in North America and Europe have made solid gains in product availability while holding the line on supply chain costs, says consulting firm Accenture (www.accenture.com).
According to the study, which surveyed 184 supply chain executives from manufacturing and retail companies in North America and Europe about their fulfillment operations, overall product availability increased from 87% to 90% between 2001 and 2003, which translates into a 25% reduction in out-of-stocks. During the same period, average supply chain costs decreased slightly, from 10.2% of sales to 9.8%.
Inventory turns deteriorated from 11.0 to 9.8 between 2001 and 2003. The most significant turn-performance problems were in the food and consumer products industry, where average inventory turns fell from more than 17 to fewer than 13 from 2002 to 2003, and in the retail industry, where average inventory turns fell from 14 to fewer than 11 over the same period.
"Availability is a particularly potent supply chain measure because ensuring that items are available when a customer wants them directly influences companies' short-term revenues," says Jose Bleda, a partner in Accenture's Supply Chain Management practice. "However, lower inventory turns -- and associated increases in inventory carrying costs -- are preventing many companies from improving overall supply chain performance."
The cost-saving opportunity ranked highest in the survey is "improving management of inventory levels," selected as "significant" or "extremely significant" by 69% of respondents. The next-highest, "reducing transaction costs," was selected by 58% of respondents as "significant" or "extremely significant."
The fulfillment challenge ranked highest is "collaborating with multiple partners," with 67% of respondents considering this as "significant" or "extremely significant." The next-closest item, "accessing currently untapped markets," was cited as "significant" or "extremely significant" by 46 % of respondents.