The Covid-19 pandemic shook global supply chains to their core, and they have not yet fully recovered. What’s more, many managers who had previously followed “lean” principles, including “just-in-time inventory management,” have overcorrected by adopting “just-in-case inventory management.” This tendency to simply overcorrect (and overstock) with an ad-hoc and ill-defined “just-in-case” inventory strategy has resulted in soaring global inventories in the retail, wholesale, and manufacturing industries at a time when the Business Confidence Index and Consumer Confidence Index both show unusual volatility. When consumer confidence varies widely from month-to-month, it is difficult for businesses to plan. In the apparel sector, for example, buyers must place peak-season orders six months in advance. With high volatility, demand forecasts in June can be completely different than actual demand in December. This raises the overall risk of either missing the season by not having enough, or facing enormous markdowns in January.
Using Technology to Improve Supply-Chain Resilience
The Covid-19 pandemic brought many global supply chains to a halt. And as we emerged from the pandemic, many companies overcorrected by adopting “just-in-case inventory management.” What’s more, when consumer confidence varies widely from month-to-month and demand remains volatile, it is difficult for businesses to plan. In the apparel sector, for example, buyers must place peak-season orders six months in advance. With high volatility, demand forecasts in June can be completely different than actual demand in December. This raises the overall risk of either missing the season by not having enough, or facing enormous markdowns in January. To move forward, supply chain managers need more flexible, dynamic connections between trading partners to replace their current point-to-point, static connections that are unable to adapt to sudden, unexpected supply chain disruptions. What they need is a more modern, more responsive supply chain platform. This article discusses how today’s supply chain technology can help businesses build more resilience into their supply chains moving forward.