**London**: As global supply chains continue to face pressures from recent events, companies must adopt agile inventory management strategies. Jabil experts recommend building supplier relationships, optimising processes, and leveraging AI to ensure resilience and maintain competitiveness in fluctuating markets.
Effective inventory management has emerged as a pivotal component of business success, particularly as supply chain teams face an array of challenges exacerbated by recent global events. The pandemic underscored how swiftly demand patterns can change; for instance, consumer goods saw a significant uptick during COVID-19, while demand for automotive and industrial products dwindled. As restrictions eased, demand dynamics shifted yet again.
Currently, sectors such as consumer goods, smartphones, and communication infrastructure are experiencing economic headwinds, with suppliers grappling with both inventory surpluses and reduced demand. This turbulence has been further complicated by geopolitical tensions and evolving sourcing patterns.
In a bid to navigate these complexities, companies are predominantly relying on established inventory management strategies. According to Jabil’s 2024 Supply Chain Resilience Survey, which comprised nearly 200 supply chain and procurement decision-makers, a substantial 77% of respondents maintain safety stock inventory and practice just-in-time inventory management. Additionally, 69% utilise ABC analysis and segmentation as part of their inventory strategies.
However, the evolving landscape of supply chains has necessitated a shift towards more agile practices. A purely “just-in-time” strategy is increasingly seen as inadequate. The current climate demands a hybrid approach that balances just-in-time management for predictable items with just-in-case strategies for crucial or high-risk products.
To enhance their inventory management capabilities, experts from Jabil suggest six strategic recommendations:
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Forge Strong Supplier Relationships: Effective inventory management relies heavily on collaboration with suppliers. Building solid partnerships allows for data sharing and alignment on procurement strategies, enabling companies to navigate disruptions more effectively.
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Optimize Processes Through Continuous Improvement: Strategies that were successful a decade ago may not suffice against today’s challenges. Implementing frameworks such as Lean Six Sigma and adopting automation can improve operational efficiency. Additionally, companies should evaluate their technological assets to ensure alignment with both current objectives and future growth plans.
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Deploy Artificial Intelligence and Machine Learning: Although still in the early stages of implementation, AI and machine learning can generate valuable predictive insights and refine forecasting methods when paired with expert knowledge.
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Focus on Resiliency Metrics: Conventional metrics for inventory management, such as inventory turnover, demand forecast accuracy, and gross margin return, are crucial. Yet, assessing resiliency—such as backorder rates, production cycle times, and the inventory of components relative to finished products—is equally necessary for gauging an organisation’s capacity to withstand disruptions.
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Embrace Sustainability Practices: Companies are encouraged to analyse their sourcing partners and practices to minimise their environmental impact, particularly in reverse logistics and waste management. Aligning inventory management with sustainability objectives can enhance brand image and comply with evolving customer demands and regulatory frameworks.
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Prioritise External Partnerships: Outsourcing inventory management and warehousing to specialised partners can provide access to expert knowledge and advanced technology. This approach enables internal teams to concentrate on core functions while benefiting from benchmarking information and tailored inventory management solutions.
In summary, refining inventory management practices goes beyond merely addressing immediate obstacles. According to Priya Anand, director of logistics services at Jabil, such improvements are essential for ensuring long-term business success. By fostering partnerships, embracing continuous improvement, and leveraging innovative technologies, companies can develop resilient inventory management frameworks that could provide a competitive edge in today’s disrupted global supply chain.
Source: Noah Wire Services
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