My prediction is that nearly all companies will return to previous just-in-time practices with tight inventories and lean assortments, hoping the 100 year pandemic lives up to its historical track record and never sees the light of day until 2121. It’s a reason to beef up inventory at the distribution level with a … Read more »

Lead times used to be known and highly predictable. That’s staying focused on demand (also more difficult these days) and managing flow versus just increasing the level of the buy. That’s not overreacting at the supply level in the face of uncertainty at the supply level. We adjusted inventory levels at the distribution level to be sure we could always flow what was needed to the stores. We used to call it “safety stock.” Or we would adjust min/max inventory levels to compensate for changing lead times. I think a better solution can be found in managing flow. This does not mean that the only solution is overbuying. And we are in for a bad case of hiccups for at least several months. Lean can become wildly inefficient with one logistics hiccup. It turns out that “lean” and “efficient” are not the same thing these days.

Companies Grapple With Post-Pandemic Inventories Dilemma – The Wall Street Journal.

SFIA Trends & Insights – SFIA (Sports & Fitness Industry Association).

Supply chains: companies shift from ‘just in time’ to ‘just in case’ – Financial Times.

Retail Supply Chain: Navigating Through Rough Waters With Improved Agility – RSR Research.

Keeping stocks to a minimum level also helps reduce fashion risk and manage items with a sell-by date. Regardless, a Wall Street Journal article from November indicated that many companies expect to return to pre-COVID inventory levels once trading conditions normalize because holding buffer inventories ties up capital and requires warehouse space, oversight and insurance. He said, “When things go sideways, having access to raw data at different levels is really critical to be able to manage and make good decisions.” Other lessons include the need for “dependable supply” as well as strong visibility that will also help when over-supply and scarce warehouse space inevitably becomes a problem. Kra, highlights the importance of assuring redundancies, such as holding extra inventory, not overly relying on short-term, flexible contracts, and having alternative supply sources, to add agility as a “just in case” buffer. The supply chain crisis, according to Mr.

Kra, “because you had all your eggs in one basket and the world went from just-in-time to this inability to get stuff for a multitude of reasons.” “That tightness really came back to haunt some of our clients,” said Mr. Speaking recently at the SFIA (Sports & Fitness Industry Association) Trends & Insights conference, Jason Kra, president at Li & Fung, said “just-in-time” drives efficiencies but reduces diversification.

Just in time inventory model