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Problems of supply chain management

The challenge of managing inventory across the supply chain is shown by US Department of 

Commerce (2013) data which regularly catalogues the ratio between inventory held in differ‑

ent parts of the supply chain.

Their analysis shows that $1,660,000 million was held in inventory across all types of busi‑

ness broken down into:

● 

Manufacturers: $628,000 million

● 

Retailers: $522,000 million

● 

Merchant wholesales: $503,000 million

Increasing supply chain efficiency involves reducing the holding within inventory while 

maximising sales. This report shows that the total business inventories/sales ratio at the 

time was 1.31. Surprisingly, between 2004 and 2013 the inventory/sales ratio has remained 

relatively stable, suggesting that across business there is limited potential to reduce inven‑

tory in systems that are already optimised and that must avoid lost potential sales through 

out‑of‑stock items in‑store.

In individual companies,