ARTICLE DESCRIPTION: A major threat to economic stability has been identified by logistics experts at Cranfield School of Management. A down turn in the economy is predicted following evidence that organisations are dramatically increasing stocks through fear of millennium shortages which may not materialise leaving them with significant and costly surplus stock. A survey of 500 organisations has revealed that companies are buying up stocks of raw materials and finished goods out of fear that normal levels of supply will be interrupted due to year 2000 compliance problems. 70% of organisations expressed this fear and as a result nearly 60% will have begun to stockpile. The extent of stockpiling varies but some organisations predicted 200% increases on normal purchasing levels. The economy is seen to be performing well but growth in some sectors can be attributed to this type of increased activity.

MORE INFO: Millennium Boom and Bust A major threat to economic stability has been identified by logistics experts at Cranfield School of Management. A down turn in the economy is predicted following evidence that organisations are dramatically increasing stocks through fear of millennium shortages which may not materialise leaving them with significant and costly surplus stock. A survey of 500 organisations has revealed that companies are buying up stocks of raw materials and finished goods out of fear that normal levels of supply will be interrupted due to year 2000 compliance problems. 70% of organisations expressed this fear and as a result nearly 60% will have begun to stockpile. The extent of stockpiling varies but some organisations predicted 200% increases on normal purchasing levels. The economy is seen to be performing well but growth in some sectors can be attributed to this type of increased activity. There may be a boom in the second half of 1999 followed by a bust in early 2000. The bust will result from organisations having surplus stocks and therefore significantly reducing manufacturing and purchasing activity during early 2000. This will place the economy under recessional pressure. In parallel, cash flow will inevitably be affected. Instead of investing in the growth of the organisation, wasteful investment in excess supplies will increase the likelihood of business fail in 2000. Contact: Cranfield University. Tel: 01234 754170

PUBLISHER: Institute of Operations Management

Page number: 12 Words: approx. 350

Vol 25 - No 07 - September 1999

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