In a period of ongoing economic uncertainty, companies are continuing to hold on to their cash reserves wherever possible. As such, many suppliers have begun to reduce inventory levels with fears that redundant stock risks significant losses if left unsold. As a result, lead times for electrical components have increased dramatically, hitting dangerously high levels that now stand at an alarming 52 days – five times higher than the previous 10-12 day standard. With less than six weeks until Christmas, this is a huge concern for retailers, who now risk being left short of supply of some of the most popular electrical products.
According to BravoSolution’s analysis, electrical components such as transistors have beenaffected most in this aggressive inventory dwindle, risking a serious shortage of the most desired consumer electronics, such as games consoles and televisions, and small appliances, such as microwaves and food processors, this festive season.
To compound the problem, the paper market is also suffering as a result of increased lead times, which could result in a significant rise in packaging costs as stock levels run low. Not only could this cause a potential shortage of products such as greetings cards, wrapping paper and even decorations, but ultimately this could affect all areas of the supply chain.
“As consumers, we use the Christmas period as an excuse to spend our hard-earned-cash – whether that is splashing out on a new TV to watch our favourite Christmas specials or treating loved ones to a games console to enjoy on Boxing Day. If inventories continue to remain at dangerously low levels, there is a huge risk that many shelves could remain empty well into the New Year and beyond,” says Paul Martyn, Vice President of Global Marketing, BravoSolution. “With lead times for core electrical products hitting unprecedented levels over recent months, there is a real risk that many of the most wanted goods will simply not be available this Christmas. Due to the surge in demand, the festive season is always a challenging time for retailers. With sales at risk at such a crucial time of the year, there is a real danger that quarterly results will be affected, which will ultimately have a substantial impact on the profitability and share price performance of both manufacturers and retailers alike.”
Top Five Potential Product Shortages:
1.Games consoles
2.MP3 players
3.Televisions
4.DVD players
5.Microwaves
About BravoSolution
BravoSolution is a leading international provider of Supply Management Excellence, delivered through software, professional services and category expertise, with a mission to generate value by supporting its clients in the improvement of procurement processes.
Founded in June 2000 by the Italcementi Group, BravoSolution delivers valuable results to its numerous customers worldwide through its offices in China, France, Italy, Mexico, Spain, the Netherlands, the UK and the US.
BravoSolution has a team of more than 450 professionals serving 400 clients in 30 countries and its supply management software has been used by over 30,000 procurement professionals worldwide.
