How do you manage inventory risks and contingencies in case of disruptions or emergencies?

ANALYSIS: 1. Risk Matrices: They provide a quick snapshot of the risk landscape, allowing businesses to focus on the most significant threats. 2. Scenario Analysis: This involves imagining various possible future events and assessing their potential impacts on the inventory. 3. Sensitivity Analysis: It can help determine how various factors, such as supply chain disruptions or demand fluctuations, affect inventory levels and costs. ACTIONS: - Develop contingency plans for high-risk scenarios. - Diversify suppliers to reduce dependency on a single source. - Adjust inventory levels and reorder points based on risk assessments. - Invest in technologies that provide real-time visibility into inventory and supply chain operations.

Assessing your inventory risk exposure is crucial for effective risk management and contingency planning. By identifying potential vulnerabilities in your supply chain, you can proactively address issues like supplier reliability, demand fluctuations, and logistical disruptions. This enables you to develop mitigation strategies, such as diversifying suppliers, maintaining safety stock, and creating emergency response plans. Ultimately, this proactive approach ensures business continuity, minimizes financial loss, and enhances resilience in the face of disruptions or emergencies. #SupplyChain #InventoryManagement #RiskManagement #BusinessContinuity #Resilience #Logistics #SupplyChainOptimization

Inventory risk exposure assessment should start from mapping supply chain. You cannot assess your risks when you only know your Tier 1 Suppliers. It's also useful to define products - suppliers matrix to identify heavy impact products (products' categories) sourced from non strategic suppliers and reassess their sourcing strategy. All steps mentioned later depend on those two things because they are more operational. Mapping android reassembling product flows are key design steps.

A avalia??o de risco de ruptura em uma cadeia de suprimentos é facilitada pela presen?a constante no gemba (local real onde os fluxos acontecem). O uso de ferramentas e procedimentos de análise s?o importantes, e a avalia??o da exposi??o de risco pode em muito ser potencializada pelo contato direto do avaliador com as opera??es reais, tanto a nível dos materiais mas também das informa??es: observando os movimentos diretamente na 'fonte'.

Para ilustrar la exposición al riesgo, en una ocasión estábamos revisando el abasto de partes para una fabrica de alimentos, e identificamos un equipo que en caso de parar detendría toda la producción hasta que estuviera activo. En este análisis de riesgos identificamos las refacciones susceptible a fallo y refacciones de largos lead time y aseguramos un inventario para este equipo, era más caro el riesgo de parar que el costo de obsolescencia del inventario adquirido.

From experience in managing B&M retail chain with 30k SKUs (changing 30% every year) and ecommerce with 1mln+ SKUs I would add one thing - segment your assortment not only on historical data. Optimizing inventory using history only is like driving a car looking only in the back mirror. Segmentation and setting service level targets must be done also on forecasted volumes and in cooperation with commercial teams. Otherwise unpleasant suprises are only a matter of time.

Optimize Inventory: Balance costs and service levels, enhancing flexibility and responsiveness. Segment Inventory: Group stock based on demand, profitability, lead times, variability. Use Buffering: Maintain safety stocks or strategic reserves. Implement Postponement: Delay customization until receiving customer orders. Diversify Sources: Use multiple suppliers, locations, transport modes. Collaborate in Supply Chain: Share data and resources with partners. Balance Cost-Service: Optimize inventory costs versus service levels. Enhance Flexibility: Improve adaptability to market changes. Improve Reactivity: Respond quicker to demand shifts. Review Strategies Regularly: Continuously update and assess approaches.

Utilize data analytics and forecasting techniques to optimize inventory levels based on demand patterns. Employ just-in-time inventory management to minimize excess stock and associated holding costs. Example: Implementing ABC analysis to categorize products based on their importance and adjusting reorder points accordingly.

Establishing inventory contingency plans is crucial for managing risks and ensuring business continuity during disruptions or emergencies. By proactively identifying potential risks, such as supply chain delays, natural disasters, or sudden demand spikes, you can develop strategies like safety stock, alternative suppliers, and flexible logistics. These measures ensure you maintain optimal inventory levels, reduce downtime, and meet customer demands, safeguarding your operations and enhancing resilience. #SupplyChain #InventoryManagement #RiskManagement #BusinessContinuity #Logistics #ContingencyPlanning

From my experience the most effective contingency strategy is inventory pooling. This has 2 levels: 1?? You need to standarize your SKU across customer, countries, or channels. Make sure you are able to use the same production lots in various set-ups. This may for example require adjusting labels on the product to have all required languages within the region. 2?? You need in advance prepare the alternative delivery road map and automate decision making to react fast in case of emergencies. Effective approach is to set this policies within Order Management System using logic like 'in case inventory unavailability in DC A fulfill customer orders from DC B'. It might be a lot of for thousands of SKUs and multiple DCs but its worth the work.

Develop Emergency Plans: Create predefined actions for inventory disruptions. Alternative Supply Sources: Activate other suppliers in emergencies. Reallocate Inventory: Shift stocks between locations as needed. Adjust Inventory Policies/Rules: Modify strategies in response to disruptions. Stakeholder Communication: Keep partners informed during crises. Align with Risk Strategies: Base emergency plans on risk assessments and optimization strategies. Regular Testing: Ensure plans are feasible and effective. Monitor Inventory Performance: Continuously track inventory health. Watch External Environment: Stay alert to market and supply changes. Update Plans as Needed: Keep emergency plans current and relevant.

To create a plan for risk, digital twin technology is game changer. Creating the digital twin and exposing it to risk helps to evaluate behaviour of network to that risk. In case if the supplier’s disruption is major issue then fixed source policy can be replaced with dynamic close distance policy. These scenarios can be tested ans recommended based on the result from digital twin.

SAFETY STOCK! Pre Covid, lean supply chain was the big thing. Then when crisis hit, the ones with stock held all the cards. Leveraging inventory optimisation & carrying not only sufficient stock of fast movers, but optimized safety stock will get you out of a tricky situation. On top of this, nearshoring is not only creating safer supply chains, but also more sustainable ones.

Leveraging inventory technology and tools can significantly mitigate risks and manage contingencies during disruptions. Real-time tracking systems provide instant visibility into stock levels, enabling proactive management. Predictive analytics forecast demand fluctuations, helping to maintain optimal inventory. Automated alerts ensure timely reordering, minimizing stockouts. Integrating these tools with supply chain management systems enhances coordination and response times. Ultimately, technology-driven inventory management enhances resilience, ensuring business continuity even in emergencies. #InventoryManagement #SupplyChain #PredictiveAnalytics #BusinessContinuity #TechInBusiness

Embrace Technology: Use tools for smarter inventory decisions and execution. Data Analysis: Collect and analyze data on stock, demand, supply, risks. Inventory Optimization: Adjust levels and flows based on insights. Process Automation: Streamline ordering, replenishment, and tracking. Inventory Management Software: Track and record inventory items. Optimization Tools: Fine-tune order quantities, safety stocks, service levels. Simulation Software: Model different inventory scenarios. Performance Analysis: Use tools to understand trends and metrics. Dashboard Utilization: Visualize inventory data for clarity. Tech Updates: Continuously update and assess technological tools.

Implement advanced inventory management systems that provide real-time visibility, automation, and accurate forecasting capabilities. Use RFID, barcoding, or other tracking technologies to enhance accuracy in inventory tracking. Example: Adopting a cloud-based inventory management system to enable remote monitoring and quick decision-making during emergencies.

IBP is key to stabilising supply chain, even in times of uncertainty. Supply Chain teams are primed to be able to look forward & backward when creating bonds with Sales & Manufacturing/Suppliers. We hold they key to EVERYTHING! Utilising real time sales vs real time inventory will allow for better foresight, no matter the situation.

Team Training: Skill-up for inventory challenges. Empowerment: Enable effective inventory management. Skill and Tool Provision: Equip for forecasting, ordering, replenishing. Decision-Making Enablement: Facilitate smart inventory decisions. Stakeholder Communication: Enhance supply chain interactions. Collaboration Culture: Promote sharing within the supply chain. Learning Environment: Encourage best practices exchange. Adaptive Strategies: Equip for market responsiveness. Regular Training Updates: Maintain current knowledge. Team-Supply Chain Integration: Ensure cohesive operations.

Provide regular training to your team on efficient inventory management practices and emergency response procedures. Encourage collaboration and communication within the team to address issues promptly. Example: Cross-training team members to handle multiple roles within the inventory management process, ensuring flexibility during staff shortages.

1?? Inventory KPIs sharing - in case only supply chain is responsible for inventory and sales is responsible for revenue, you will never have optimized and risk secure inventory. 2?? Formal Product Life Cycle Management Process - without knowing what is product status you cannot set proper risk management strategy and active/inactive status available in most ERPs is not enough. 3?? Flow importance flagging - shipments, orders, should have a system flag to showing their priority (base od out of stock status, rotation, etc). This especially important when some points of your distribution network have capacity limitations.

Em situa??es de ruptura ou emergência na cadeia de suprimentos, as a??es de contingência evidentemente precisam ser conduzidas com agilidade. Neste sentido, quanto mais resiliente a cadeia estiver, haverá maiores condi??es para a rea??o ágil. Pensar lean e ser ágil configuram-se como os instrumentos cruciais para constru??o prévia de uma cadeia de suprimentos resiliente, responsiva e enxuta.