What are some of the common challenges and risks of inventory management in a global supply chain?

The current issues in South Africa is a big concern. Load shedding, increasing fuel prices and increase in consumer goods prices makes it difficult to predict what stock levels to keep. Suppliers are struggling to produce items in time because of lack of electricity. Prices on transport are on the increase and the downstream impact is huge - the costs needs to be passed on to the consumer. Global prices have gone up after covid. Finding that balance between buying globally and locally is a real challenge - how much money will be tied up in stock levels?

To address demand variability in a global supply chain: 1-Accurate Forecasting: Invest in advanced forecasting tools and data analytics to predict demand fluctuations more accurately. 2-Safety Stock: Maintain safety stock levels to buffer against unexpected demand spikes or delays in supply. 3-Demand Sensing: Implement real-time demand sensing technology to quickly adapt to changing customer demands. 4-Supplier Collaboration: Work closely with suppliers to share forecasts and improve flexibility in production and delivery.

To lock best price for the raw materials since the price is fluctuate and to ensure that we keep the minimum amount of stocks but at the same time able to full fill customer demand.

IIn a Private Label setup, Lead time of components/raw materials plays a crucial part in downstream Supply Chain. Mapping out the impacts of Raw Material lead time variability to SKUs helps plan better and at the same time allow us to monitor service levels. For more Direct Sales, Building excess inventory either in stock or in transit provides the flexibility to cater customers changing requirements.

the material should be visible and physically should be accurate as in the system. this is the most of the mistakes i see in this industry, FIFO items should be in the 1st rows .

Key aspect of risk management is identifying alternative parts and defining a critical level for each inventory part category. This allows companies to flex with the existing capacity and build allocation in order to mix and match between multiple Finished Goods with available Inventory. Many times inventory decisions can be linked to probability by using historical supplier delivery performance and usage of statistical regression models to simulate impact of external parameters.

one of the key aspect is the replenishing time, material need to be replenish ASAP, as some item is very critical. this is why replenishing time circle should be as minimum ASAP.

Holding inventory in various locations to meet global demand can increase holding costs. High holding costs can erode profit margins, particularly if products have a short shelf life or are subject to obsolescence.

As a supply chain guy, I note a pervasive "system nervousness" in the industry, often leading to hasty decisions based on unconfirmed data. It’s vital to remain calm and not overreact to fluctuations, including concerns about China’s slowing economy. A rational, measured approach, focusing only on highly probable events, ensures stability in a global supply chain. Personally, I reserve action for incidents with over an 80% probability of occurring, and then respond with a limited, 20% engagement to monitor the effects gradually.

Challenges is in shipping and logistics Lead time volatility. Exchange volatility is (high now) Excess and short variance against invoiced and actual. Rejections on considering lead time and accuracy in reorders. Consumption volatility due to lack of forecast in production and sales. Sudden addition/removing of components. Lack of alternate plan. Adhoc requirements from statutory authorities, directly making delay in receipt. Restriction in MOQ/EOQ against the ROQ.

Currency exchange rates can impact the cost of inventory and lead to unexpected financial implications. Fluctuations in exchange rates can affect the profitability of products, especially if prices are fixed in a single currency.