Question

Data suggest that while overall average inventory are declining, the relative percentage being held by manufacturers is increasing. Explain why you think this observation is either true or false.

Answer 1

The application of information system and integration of the supply chain among the different participants have helped accurate forecasting of the demand in the coming period. It has helped in decrease in the general stock level in the entire production network as data stream is quick and moderately more exact. It has freed the cash for other production work in the supply chain. However, the market capriciousness and unpredictability popular has made makers take a moderately greater offer of the stock as the element is in charge of the creation of products. If goods are not produced, then the supply chain cannot cater the demand in the market, an opportunity created by the dynamic business environment. So, it is true that the manufacturers take the relatively bigger share of inventory in the supply chain.

This shift in the inventory level and overall inventory, brings efficiency, flexibility and higher profit to the supply chain and % of order serviced, increases. In particular, the shift has helped manufacturers to gain following advantages:
1.  To sustain the volatility of the market and eliminate the stock-out cost

2. The ability to cater the opportunity created by the speculative market scenario
3.   Bargaining power shifts to the manufacturer and becoming most important entity in   the supply chain

Please rate it