Lessons from COVID-19: 4 inventory management strategies
COVID-19 highlighted a number of problems with current approaches to inventory management. Here are four strategies that leaders can use to correct those inefficiencies.
The TechTarget article, "Lessons from COVID-19: 4 inventory management strategies," quoted Russell Reynolds Associates Consultant Ben Shrewsbury on the importance of a diversified supply chain. The article is excerpted below.
4 critical inventory management strategies
The COVID-19 pandemic has provided numerous lessons, including for all aspects of the supply chain. Here are four inventory management strategies supply chain leaders and inventory managers can use going forward.
3. Diversify the supplier network
The organizations that are better positioned to weather the COVID-19 outbreak or any pandemic are those that are able to quickly find alternative suppliers to keep operations running, said Ben Shrewsbury, who leads the global operations and supply chain officers practice at Russell Reynolds Associates, a management consulting firm in New York City.
The COVID-19 pandemic has caused organizations to consider investing in more "flexible and resilient" supply chains -- that is, supply chains that can resist disruptions and recover operational capabilities after disruptions occur -- by adding additional sources of supply for critical items so they can quickly pivot to meet changing market demand, he said.
So, the lesson learned is that the companies that have built-in levels of redundancy and aren't just-in-time-optimized when it comes to inventory are better positioned to meet customer demand, he said.
For example, if an organization's suppliers are typically in East Asia and China, it's important to have the ability to look at other markets, such as Vietnam, Singapore or Malaysia, to enable the company to adapt in the case of a global pandemic, such as COVID-19, or even political or financial risk, Shrewsbury said.
"Flexibility in terms of the ability to reposition or have a nimble network that will allow companies to respond appropriately is necessary," Shrewsbury said. "Although speed and cost to serve remain important, supply chain flexibility and resilience have proved to be critical differentiators."
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