O ne of the most visible impacts of the pandemic on the supply chain was inventory management. Empty store shelves, essential item shortages, and limits on the number of certain products a customer could buy at some retail stores impacted individuals on a personal level. And supply chain managers struggled to ful ll customer demand that was very different from its forecast inventory planning. “No longer can companies rely primarily on historical data and formulas to accurately forecast inventory,” says Steve Banker, vice president of supply chain management, ARC Advisory Group. The silver lining, however, is the adoption of demand sensing practices to inform inventory forecasting.
capital,” says Andy Dyer, president of transportation management for AFS. “These strategies are highly dependent upon reliable transportation networks. “Recent transportation network disruption has prompted companies to think much more strongly about assurance of supply while being mindful of carrying costs,” he adds. “One of the primary issues is port capacity,” notes Lin. “Delays at West Coast ports are resulting in companies looking at other ways to get imported inventory into the United States. This includes using alternative ports, like Jacksonville, Florida, or other ports on the East Coast, resulting in more intermodal shipments.” It may appear to be counterintuitive, but in today’s environment, “It can be more cost-effective to receive goods at an East Coast port and deliver it over-the- road in California when you factor in lost sales due to stockouts,” Lin says. For some companies, such as Musco, the solution to addressing a volatile transportation environment is to partner with a 3PL provider with scale and expertise in transportation. “In order to manage inventory, you
“Companies that made use of planning systems combined
“Inventory management is very different today than two years ago,” says Michael Lin, director of supply chain, Musco Family Olive Company. “Companies are increasing their comfort stock to offset the uncertainty of a pandemic.” AFS, a third-party logistics (3PL) provider, can attest to this trend across many of its shipper customers. “Pre- COVID, the strong trend was toward just-in-time and lean inventory levels to reduce obsolescence and free up working
with demand sensing—the use of multiple, real-time signals, like sales in a particular store or shipments from a retailer’s warehouses to their stores and machine learning—had signi cantly fewer errors in forecasting during the early days of COVID,” Banker explains. Two years later, demand sensing is part of many inventory management systems. Another best practice that remains today is evaluating stock levels across an entire network, rather than site to site. It has become important to evaluate suppliers and customers individually. “Companies are often willing to pay more for transportation to meet the needs of retailers that demand 100% compliance on-time and in-full deliveries,” Banker says. “Failure to do so can result in hefty nes for the supplier. Other, less critical shipments can be handled in more economical ways.” Having the systems and data to make these informed decisions is critical. COST-EFFECTIVE TRANSPORTATION OPTIONS Beyond the planning stages of inventory management, companies also face challenges on the execution side due to volatility in the transportation market, virtually across all modes.
To manage inventory forecasting and demand, many companies turn to technology. SnapFulfil, for example, offers a warehouse management solution to companies in a range of industries.
254 Inbound Logistics • January 2022
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