Supply Chain Cash Flow Smoothes Out Amid Cautious Holiday Inventory Strategies

The December Supply Chain Index from Cortera provides additional evidence that retailers were cautious in their 2009 holiday inventory strategies, resulting in less debt and better cash positions. The monthly index measures accounts receivable activities among manufacturers, distributors and wholesalers, retailers, services, and transportation companies.

The December results were largely consistent with levels from November 2009, marking the second consecutive month of conditions historically seen in the months following a holiday shopping season but rarely seen during peak shopping months.

In recent years, payments and related cash flow throughout the supply chain 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. In contrast, Cortera's December 2009 SCI showed such behavior 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.

Source: http://www.supplychainbrain.com/