New supply chain monitoring research indicates that cash flow for US firms has been widely “smoothing out”.
The December 2009 Supply Chain Index (SCI) report from business credit bureau firm Cortera indicates that retailers and suppliers have been reducing inventories in 2009 to better meet cautious sales targets as they learn lessons following a tough 2008 holiday shopping season.
The data, which is based on payment activities of approximately 350,000 US businesses, marks the second consecutive month of conditions historically seen in the months following a holiday shopping season, but rarely seen during peak shopping months.
According to the report, in recent years, payments and related cash flow throughout the supply chain have slowed as various stakeholders took on more trade related debt as they built up seasonal inventories: “In such “normal” conditions, payments increased and debt became more current in January, as fresh cash received from holiday sales in November and December was used to pay suppliers and quickly sped its way through the supply chain,” it stated.
“In contrast, Cortera’s December 2009 SCI showed such behaviour occurring during – not after – the holiday season. This provides further evidence to widespread reports that retailers were employing more cautious, upfront inventory strategies with little expectation of replenishing stock throughout the shopping season.”
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