Inventory Management for the future

Learning from the pandemic: Inventory Management for future

Traditionally, if you wanted to manage your inventory effectively, you relied on efficiencies such as just-in-time delivery, minimal buffer stock (back stock) and a reliable sales history. But in one year, everything changed.
The supply chain faced multiple challenges, including reduced work forces, limited availability of raw materials and increased demand. Retailers often had to get creative to figure out how to keep up.
Inventory management of the future may focus more on agility in sourcing, tighter assortments and increased emphasis on buffer stock.

Stock Availability has trumped brand loyalty for many customers during the pandemic. This shift presents opportunities to bring in new brands, as some of these preferences may stick for the long term.

1. Rethinking Sourcing:
Be agile enough to quickly utilize secondary suppliers and be willing to introduce new brands to your customers. It’s a strategy that will give you the best options when the supply chain gets tight.
Other Options include consolidating vendors in some categories, focusing on suppliers who can deliver. 

2. Rethinking Assortment Planning:
As the pandemic pressured retailers to stock up in some areas, they were faced with decisions on how to spend their cash. Trimming out slow-movers has always been an inventory management best practice; now assortment planners may be a bit more aggressive when purging C and D items. Keep slower-moving items slim and trim.
The pandemic has re-emphasized the importance of communicating with staff on the sales floor and customers about what they think is missing in the inventory. Sometimes, staff suggestions bring up products companies may never have tried had they not been listening.

3. Rethinking Ordering:
Retailers who used to rely on just-in-time delivery to maintain inventory levels may keep more backstock at points of aggregation to provide a safety net against supply chain issues. They have the confidence to buy larger quantities, and often buy them further in advance than may have been necessary in the past. Retailers who already have efficient operations and have cash on hand to invest in extra inventory will be best prepared to deal with supply challenges.
Receiving process have changed. Earlier they used to be truck to shelf. Now receiving processes are truck to warehouse to shelf.

Carleton, Jesse. “Inventory Reboot: How Supply Chain Disruptions Changed Inventory Management.” Hardware Retailing, vol. 221, no. 2, Aug. 2021