Poll: Inventory Reduction is the New Normal for Retailers

Peak season sales numbers for 2009 moved in a positive direction overall and helped to show retail companies precisely which supply chain strategies are most successful for pulling out of the recession, according to a recent Tompkins Supply Chain Consortium survey report, Lessons Learned from a Tough Market.

The Consortium polled senior level supply chain executives from top retail companies and asked about the supply chain strategies they used with regard to people, processes and technology. The results showed that the top four retail inventory strategies used by respondents were:

* Reduced inventory levels

* Increased emphasis on forecasting

* Improved planning processes and tools

* Increased reporting and information

Interestingly, the survey also revealed that reducing inventories did not negatively impact sales volume. Respondents said inventory levels remained high enough to decrease the chance of stock-outs, and about one-third of those surveyed did not see any lost sales due to reduced inventory. Two-thirds said they lost less than 0.5 percent of sales due to inventory reductions. Ten percent actually saw their sales numbers improve. Survey respondents said they emphasized forecasting and planning to reduce inventory.

Based on results like these, it's not surprising that more than 80 percent of respondents in the poll now predict that reducing inventories is going to be a part of their strategies in the future. As the report says, inventory reduction has become "the new normal." In addition, companies in the survey are planning to improve forecasting methods, refine SKU base and execute initiatives with suppliers more effectively.

The full Tompkins Supply Chain Consortium survey report is available here (registration required).

TAGS: Finance
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