Yes, it's there...

I love metaphors, similes, and other creative turns of phrase. It allows us to boil complex issues down to something most everyone can understand and/or tie to. So, here's Today's Metaphor, in a visual presentation:





And the identity of said Pachyderm is--The Supply Chain. Welcome to Chapter 2 of the Feast/Famine cycle that this space predicted in 2008. You remember, don't you? The "feast" of overstocks caused by the downturn would be followed by the "famine" of tighter inventories and the eventual (if not inevitable) uptick in retail sales?

The first half of 2010 was a banner one for retailers. Depending on who you are, your sales might be up 30% over the admittedly crappy 2009 figures. But in 2009, we had inventory out the ying-yang, and we spent most of the year trying to get rid of it. In 2010, the demand might be there, but the product isn't, at least at the levels it was last year.

And our business, which lives by the "slop" in the inventory forecast, is suffering the consequences. Got a big order? Fabulous! Now, can you get the product? Not so much. This is a Serious Thing for our channel, since our ability to forecast (zero) and our companies' willingness to hold large quantities for our business (almost zero) create challenges.

And guess what? It's gonna get worse before it gets better, assuming it actually GETS better. You see, corporations are seeking more inventory turns, which by definition requires less product on the shelf (or dramatically higher sales, and who really think THAT'S coming?). This impacts the "one-off" segment of our channel the most, and it creates stress on all parties.

We're heading for that point where if it's not in the forecast, it sure ain't gonna be in the warehouse. And even forecasted product might not be there because of the "issues" the Supply Chain faces. To wit:

There's a labor shortage in China (if that can be imagined).
The domestic market in China is growing, so production capacity that might be used for exporting product is now being used for the home folks.
Freight is a nightmare, as there are fewer container vessels, and higher costs for those that remain.
Costs are going up.

The Cardinal Rule of Sales is "Don't sell what the customer wants--sell what we've got". "What we've got" will continue to be challenged, especially in high quantity. Please check the security of your seat belt--it's about to get bumpy...


Pete