Inventory management for the next external disruption – The Daily Gazette
If I view my household as a business and I strive, like any business, to ensure that my expenses do not exceed my income, what mindset should I adopt post-pandemic to fill my pantry? : just in time or just in time? -Case?
As an inventory management tool, just-in-time, or JIT, has been a business darling for years, created by Japanese automaker Toyota to increase efficiency and reduce costs by having no hand than what is needed at each stage of manufacture. treat.
Over time, however, JIT, also known as lean manufacturing, morphed into finding and securing the cheapest supplier, which often meant offshoring.
“Globalization dominated the day, and American companies failed to source massively from the planet’s manufacturing hub – China,” said Glenn Richey, chairman of the supply chain management department at Harbert. College of Business at Auburn University in Alabama. school interview published last fall on post-pandemic supply chain strategies.
“Just-in-time and lean manufacturing meant that companies no longer had to keep a safety stock of key supplies or even finished products on hand,” he added, as management pursued a “ state of mind at the lowest cost”.
But that all came crashing down when COVID hit and factories around the world were forced to close, leaving businesses that relied on a single supplier without a contingency plan.
For me and my JIT shopping habits, which only restocked the pantry when I ran out, pandemic-induced shortages often meant periods without rice, pasta, or soup.
I certainly wasn’t the only one, as new data quantifies ongoing “inventory distortion” – the combined cost to retail of having too little or too much product for consumer demand. According to IHL Group, a Tennessee-based retail and hospitality research consultancy, stock-outs and overstocks will total $1.9 trillion worldwide this year, up nearly 13% since 2020.
Stock-outs are the biggest problem at $1.23 trillion, according to IHL, which released the numbers in a report and webinar last week. He blamed the growth since the start of the pandemic in 2020 on “massive disruptions due to supply chain gaps, staff and raw material shortages and government shutdowns”.
Greg Buzek, Founder and President of IHL, previewing the report on LinkedIn last week, suggested that inventory management via just-in-time or just-in-case would become a topic of debate in boardrooms of companies “in order to be better prepared for the next external”. disturbance.”
Finding the right balance will not be easy, however, both from a practical point of view – warehouse space for additional inventory is valuable – and existential: will investors accept the higher shipping costs?
“But being better prepared for disruption means more infrastructure, more inventory, and lower short-term earnings for more redundancy in the future,” Buzek wrote.
Looks like my pantry purchase could use an adjustment to grab two of everything on my list – just in case something isn’t there next time.
Marlene Kennedy is a freelance columnist. The opinions expressed in his column are his own and not necessarily those of the newspaper. Join her at [email protected]
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