Here's an actual scenario I'm facing right now. One area of business I'm currently involved in is supply of diesel engines for industrial applications sourced direct from one of the largest Japanese manufactureers. I placed an order in March for a number of engines, production is scheduled for May which is normal, I had planned to and should receive these in July if there are no shipping delays. No problem there, the reorder process takes this lead time into account.
I placed a further order in April, based on past history and the manufacturer's previously advised production schedule, production was scheduled for June so I planned to receive these engines in August. I've just been advised that due to parts shortages in Japan, production will not take place until August so the earliest I will receive them is October, two months later than anticipated.
The nett result is that I will run out of stock some time between August and October and there is not a damned thing I can do about it.
This is just one scenario but we're confronted with such scenarios all day, every day for some time now, we've upped our ordering to the point the warehouse is bursting at the seams but there are still items where we run out of stock as there is no consistency in supply. Not to be forgotten is the considerable impact on operating capital, we've put milions of dollars of extra stock on the shelf and/or on order in an attempt to keep our customers happy but there is only so much cash available.
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