Ever wonder why, without fail, popular items quickly and consistently run out of stock during the busy December holidays? Blame it on the supply chain, according to a new survey by Riverwood Solutions.
The Dallas-based company, which provides managed supply chain services, polled 600 supply-chain executives and found that 38% of them said they lack proper visibility and communication with their vendors during the holidays, which is the biggest problem they face during the season.
Moreover, 14% of them said they often overestimate how popular an item will be and end up with too much supply that does not equal demand. On the flip side, the same percentage said they underestimate how popular an item will be and run out without meeting demand for it.
Mark Medlen, COO, Riverwood Solutions, attributed the lack of visibility in the supply chain over the holiday period to poor communication with vendors. "This often occurs as result of distance, time zone variances, and differences in business culture, combined with the disparity in demand and the increased pressure of higher volumes," he told Design News. "The result is additional unwanted supply chain risk, perhaps quality issues, or even delivery failures."
Making sure they have enough items in stock isn't the only problem supply-chain executives said they face over the holidays. Lack of preparation also is an issue, with 10% admitting they don't get ready for the holiday rush early enough. The same amount also said they don't process orders quickly enough during the season.
That said, let's hope the supply-chain has been on top of their game this year if you've asked Santa for a fitness tracker, which 52% said they believe will be the most popular wearable gift this holiday season. Thirty-eight percent think the Apple watch will be the most popular wearable under the tree, while 10% said other smart watches will be a top gift this year.
The survey also polled respondents about some of the challenges they face around the delivery of new technology such as these wearable devices.
The biggest overall challenge supply chain executives said they face in bringing this technology to market is going from prototype to market, with 52% of respondents citing this as the most difficult aspect. Other issues with wearables include making the technology work (19%) and sourcing custom parts (19%), according to the survey.
The study also pointed out other misconceptions surrounding bringing prototypes to market, including not knowing how time consuming it would be (24%) and underestimating how expensive it would be to get from prototype to product (19%).
Dealing with oversees suppliers also can be tricky, with 48% of those polled citing a difficulty in understanding foreign business cultures as the biggest challenge to these type of relationships. Moreover, 62% of supply-chain executives said that quality concerns make selecting a vendor to work with challenging.
Other challenges that arise when working with overseas suppliers including difficulty in validating their capabilities (24%); agreeing on terms and contract negotiations (14%); and working in different time zones (10%).
Riverwood VP of Business Development John Daker said key takeaways from the survey include a need to build strong relationships that have transparency and visibility, among others. "A good supply chain management and outsourcing strategy requires timely accurate information to flow in both directions and that can be challenging," he said, adding that the company has been developing and managing these relationships and supply chains for its clients for many years with great success by putting people on the ground that speak the same language and understand the same business culture as the vendors.
"A successful and streamlined supply chain requires experience and investment of time and resources, but when it's right, it's an impressive thing," Daker said.
Elizabeth Montalbano is a freelance writer who has written about technology and culture for more than 15 years. She has lived and worked as a professional journalist in Phoenix, San Francisco, and New York City. In her free time she enjoys surfing, traveling, music, yoga, and cooking. She currently resides in a village on the southwest coast of Portugal.
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