Managing Supply Chain Risk

How Safe is your Stock Transaction?

Whenever an organisation has to store or transport inventory, there is always an element of supply chain risk that has to be managed. Aside from the obvious scenarios such as theft or damage of stock, there are other, more subjective factors such as the demand for the goods.

We know that an item only gets sold or bought because of how desirable it is to the consumer, in the context of what other solutions there are in the market. Every time a company buys an amount of stock, they are effectively gambling on that stock still being in demand when it arrives in the warehouse. We can assign an element of risk to every purchase order based on the fluctuation of its expected saleability.

Once the stock has arrived and the subsequent movement has been agreed, then the more conventional risk comes into action. The items you are trading will encounter several risks along the supply chain. Not least, its inevitable long journey in a shipping container across the sea from the Far East. Even before it arrives in the country, there are several scenarios where the container could incur delay or damage.

The importer will have to factor in the likelihood of theft or damage en route, so it is important to have a supply chain operation that is optimised for the safeguarding and efficient handling of your goods. Even if no damage or loss is incurred, there may be a price risk assigned to the speed at which they are moved to their next place. After all, most warehousing is charged by the amount of time they have been stored. Would you still be making a profit from your goods if they had spent a full year in a warehouse?

Extra Costs

A trader would base their business model on how worthwhile it is to make a sale. At its basic level, a company might buy for 1 and sell for 5. But this is only true when there have been no other costs along the way. It is therefore essential to plan an ideal lifespan for that item whilst it remains your property. The world of fashion is obviously dictated by trends, so it is absolutely vital that a product completes the manufacture and logistics stages as quickly as possible. A product whose journey to market is delayed by just a matter of days can lose the majority of its value just because the sweet spot for demand has passed. The most efficient businesses are those that have a very good grasp of the lifecycle of their goods. A supply chain solution with a world class warehouse management system is best placed to ensure the most efficient timeline of a product.