The amount of goods moving through the supply chain is never constant. It is based on fluctuating economic indicators, as the end goal of logistics is to keep a correct quantity of merchandise in stores, warehouses and transit at any given time. Too much production means serious cost overage and too little means wasted opportunities to make sales.
As recent economic data has made clear, flexibility is especially important as economic indicators are often far from straightforward.
Supply chain management is predicated on responses to new stimuli. According to the information from the Conference Board, now is a time to pull back and take a conservative approach. The latest information from the polling organization found customer pessimism at its highest level since November 2011. The numbers represented a near deadlock from the previous report, with consumers deeply concerned about the overall course of the market and their inability to find jobs. Faced with such data, logistics managers may believe it is time to slash production.
Reuters, in contrast, recently reported that August was a strong month for sellers, with stores improving month-over-month from July and beating analyst estimates. According to the news provider, back-to-school shopping carried results higher at major chains such as Gap and TJX Companies, indicating that the consumer confidence index failed to account for the hardiness of shoppers' needs for school supplies.
"It's a much stronger back-to-school season than even the most optimistic analyst could have forecast," said retail analyst Joel Bines, according to Reuters. "[Companies] will be cautious and have planned promotions but can have more confidence about not needing unplanned promotions."
Quick reactions could be difficult to execute for supply chain managers, as companies often engage in a series of complex partnerships and alliances across borders. Shortening the time to carry messages between suppliers, manufacturers and sellers could rely on technology. With advanced B2B integration options, companies can immediately view accurate, transparent and up-to-date information. Turning this into the basis for major, market-based shifts could represent the difference between successful firms and trailing competitors.
Any department within a firm could be the first to notice a new trend impacting sales. How that section conveys the message to partners and how long it takes could determine whether the firm and its supply chain allies can react in time. A digital solution such as electronic data interchange (EDI) could be significantly faster than old-fashioned alternatives.