The New Shape of Supply Chains

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Inventories may be tightening as supply chains grapple with demand fluctuation, supplier challenges, stagflation, and economic volatility. Lisa Anderson, MBA, CSCP, CLTD, and president of the LMA Consulting Group, believes the supply chain focus is now turning to inventory.

“The supply chain has been front and center since the beginning of the pandemic when toilet paper highlighted the importance of a reliable supply chain… Now, the emphasis is on inventory,” Anderson says, “Building inventory was important when supply chains were trying to regain a semblance of order. Yet, in haste to build inventory, sometimes the wrong inventory was increased, the right inventory was in the wrong place, profitability was sacrificed, or all of the above. Whatever the situation, inventory is now a key focus.”

Organizations should look at existing inventory, customer demand, and profitability to reshape operations and supply chains; in effect, they need to “right-size.”

“Companies need to reshape their operations and supply chains by right-sizing inventory levels. The trick is to cut inventory without impacting customer service or cutting performance or profitability. Volatility in the economy will be the reality for the foreseeable future.”

Anderson also recommends that businesses put processes in place to evaluate demand, create accurate forecasts, and position capacity accordingly if they don’t already have them.

Ms. Anderson and her firm use the SIOP process to capitalize on opportunities while maintaining organizational alignment. “Pencils and erasers, excel spreadsheets, and gut instincts no longer work. Manufacturing today is complex… It is up to manufacturers to anticipate change, plan for it, and be able to change at a moment’s notice. Processes can provide data, consistency and order to the many moving parts in the supply chain,” she concluded.

Ms. Anderson provides supply chain updates through Supply Chain Chats, a series of short videos that address current topics, issues, and challenges related to supply chains.

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