1 December
2010 | Angeline Albert
Retailers’
failure to invest in their inventories this year could see a shortage of top
electrical goods such as games consoles and flat screen TVs this Christmas.
This is the
warning from procurement consultancy BravoSolution,
which said shortages are looming. Ongoing economic uncertainty led companies to
hold on to cash reserves, and suppliers reduced inventory levels rather than
have redundant stock and risk significant losses if products were left unsold.
Despite there
being less than a month to go until Christmas day, lead times for electrical
components have increased dramatically, hitting dangerously high levels of more
than 50 days instead of the 10-12 day average.
“Lead times
were becoming a problem as early as March 2010,” said Paul Martyn, vice-president
of global marketing at BravoSolution, because fears of a double-dip recession were
setting in.
The company
said the supply of electrical components, such as computer chips and touch
screens, has been affected by inventory decline.
Martyn
added: “Buyers should nail down lead times and build flexibility into contracts
with suppliers to suit changes in economic conditions. If inventories remain at
low levels, supply may not be able to catch up with demand until the first
quarter of next year. This means quarterly results could be affected, which will
impact on the profitability of manufacturers and retailers.”
☛
A focus on toy supply chains will
appear in the 9 December issue of SM
