There is pressure from finance to reduce stock and this has put us behind on our normal ordering. How risky is this and what should I be doing?
This is very risky and a common problem among retailers at the moment. The recession has greatly disrupted the sourcing dynamic. There is so much uncertainty about forecasting and so much concern about the volumes at which retailers should be pre-ordering that any concept of a well-organised sourcing programme often goes out the window.
The problem is that leaving too much volume too late will result in many retailers being desperate for stock. LCP Consulting chairman Alan Braithwaite says he has witnessed first-hand through his company’s contacts that orders are as little as 30 to 40 per cent of where they should be for normal trading and that many factories have shut their gates as demand has slipped.
He says: “The question is will those suppliers want to open up again to fulfil these orders as a result of the global slowdown when the long-term outlook is so volatile, and can they get the materials?”
Braithwaite advises retailers to move fast. Key is a rigorous assessment of each category to identify the winners and suppliers that can respond in time. Accelerated buying and sourcing programmes will then have to be put in place pragmatically to reduce the risk of not having enough of the right product.
Ultimately, he adds, it will require careful and constant attention to key supplier relationships. “Without this, you risk being their second priority when things get difficult and there will be no time to repair the potential damage.”
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