TT Club has claimed that focusing on a much-overlooked aspect of supply chain operations, such as systemic stockholding, order flow, and other inventory management processes can significantly reduce risk.
TT Club has found that the risk of goods being stolen increases in environments that are characterised by confusion and disorganisation. This conclusion is based on an analysis of past claims related to cargo theft in the warehousing and distribution industry.
TT Club emphasizes the importance of adhering to systematic processes while stressing that effective inventory management and error mitigation can be achieved through improved data communication and traceability of goods.
The data interfaces between various software systems that are employed to manage the flow of goods including WMS, OMS, TMS and ERP should ensure that actions taken in one system are recorded in the others. Breakdowns in communication between systems can be difficult to identify but may lead to costly errors, according to TT Club.
In minimising such errors, traceability throughout the supply chain is crucial in uncovering discrepancies promptly. The ultimate goal is to provide full visibility of goods as they move through the supply chain.
A well-designed system should systemically mirror all physical movements of goods and be particularly focused on circumstances where visibility and therefore traceability break down.
Most commonly this occurs when a user fails to adhere to the correct process, but operations should also consider where gaps in the process lead to a breakdown in traceability.
According to TT Club, the consequences of inadequate inventory management can be severe, extending beyond the cost of cargo loss to risks of negatively impacting commercial relationships.
Inventory management plays a key role in fostering a security culture within the supply chain. It should enforce procedures, maintain traceability and respond to discrepancies effectively, resulting in a secure and efficient supply chain operation.
“A failure to exercise such systematic control can have enormous risk consequences for security, reputation and contractual liabilities,” said TT Club’s Josh Finch.
“Inventory management is an aspect of the supply chain that often runs quietly in the background until something goes wrong. Small issues can quickly turn into large and costly errors if they are not observed and rectified.”
“Stock that is not traceable is at risk. It may be stolen or may simply go missing, making it difficult to determine where the failure has occurred,” explained Finch.
“It is crucial therefore that supply chain operators responsible for managing inventory seek to maximise traceability throughout the entire journey of a particular item of stock.”
This time last year, TT Club increased its efforts to promote industry awareness of both trends in criminal activity and methods of combatting it.