Inventory management more difficult
Reaffirmed: the importance of an Inventory Management policy in 2023
Recently, the Dutch OMT has officially declared COVID-19 to be ‘endemic’ – suggesting that the worst might be behind us. Nevertheless, the global pandemic has caused an enormous disruption in most supply chains. On top of the pandemic, the horrible 2022 invasion of Ukraine has resulted in an even more unpredictable and unstable environment for organizations to operate in.
A 2023 research amongst publicly traded companies in Finland, conducted by Olli-Pekka Hilmola, concluded that inventories have substantially increased over the course of 2021 and 2022. As Hilmola states: ‘It could be said that (…) companies realized that low inventory days and just-in-time systems were not for operating in the environment they were facing.’
Frequently mentioned causes of said build-up of inventory were – amongst others – availability issues, buffering need, and increasing prices.
Despite the changed playing field, a considerable amount of organizations did not modify (or draft, for that matter) their Inventory Management policy adequately – e.g. in terms of average inventory, safety stock, and re-order points – resulting in stockouts and delays that could have easily been prevented. If anything, the crises mentioned above have emphasized the need for proper Inventory Management.
Would you like to (re-)evaluate your own inventory management, based on available data? At WeY, we specialize in Warehouse Engineering. Feel free to reach out to myself or one of my colleagues – we’re happy to help!
As a final note: the above cannot be viewed separately from your sourcing strategy, obviously –organizations have to review the matter integrally; with inventory resilience as a key priority.