Too much stock?

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One very obvious effect of the recession that struck in 2008-9 was the way in which companies quickly destocked – driving down inventory to become leaner and more agile to face the challenges ahead.

And it seemed likely that this would herald a new era in which companies adjusted to working in a leaner way, so it a something of a shock to read the latest State of Logistics report by the Council of Supply Chain Management Professionals.

This annual study of logistics in the United States has been reporting a rising trend in inventory levels and this year has found that they are now back at pre-recession levels.

This could be a cause for concern for the US economy, it says.

The study found that retail inventory levels remained flat, the culprits are the wholesale and manufacturing sectors – and it suggests that inventory management processes have changed.

And of course, if it is happening in the United States, it’s pretty well certain that it is happening around the rest of the world as well.

There are plenty of potential reasons why inventory levels rise. It could simply reflect the fact that the growth has been more fragile than expected.

There is also the argument that retailers can be quite adept at shifting the responsibility for holding inventory back onto suppliers.

And rising stockpiles of semi-conductors in the first quarter of 2012 have been taken to reflect an expectation of rising demand this year.

Whatever the reason, it does suggest that now might be a good time to revisit that work on lean supply chains to see if there might still be lessons to be learnt from it.

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