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Effective inventory management and the impact of design

12 October 2020

When Covid struck, this presented a multitude of issues, namely managing the expedited shift to online consumer purchasing and changing demand for products, as well as consideration of the resilience of our distribution networks.

However, despite all the issues the warehouses, distribution centres, retailers and logistics companies have had to tackle, two things stand out as being universal. It’s made everyone review and reassess their supply chains, as well as their routes to market.

For many businesses, this almost instant change in customer demand for their products has had a significant impact on the supply chain and prompted some hasty responses; such as increasing stock-holding capacity in the UK to manage the upsurge of consumer demand, as well as rationalising non-essential product lines. 

However, six months into the pandemic, for many of our clients, it is now time to consider what their long-term inventory holding strategy should be and begin to alter their logistics and supply chain processes to match. We’ve seen a number of different solutions, but common trends include:

  • Repositioning inventory to better match your service requirements e.g. holding smaller quantities closer to main markets to improve speed of delivery
  • Assessing if holding smaller volumes of inventory is more effective in responding to fast moving shifts in consumer trends
  • Considering near-shorting and adjusting inventory planning to ensure product stock is ordered from the supply chain in more frequent, yet smaller quantities
  • Using advanced data analytics and modern technologies to improve supply-chain visibility

However, while inventory management is being carefully considered, what is equally important and often forgotten, is that changes in inventory management processes must be reflected in warehouse design to ensure that service quality, efficiency and effectiveness are not reduced. 

Which is why, in the last few months we’ve been working with our customers by carrying out in-depth data analysis and modelling to assess the impact of these changes on their warehouses, and then working to carry out simple changes in order to optimise efficiency and throughput once the new stock-holding strategy comes into effect. In doing so, we’ve successfully managed to ensure that service-levels have been retained or even increased – often through low-cost tweaks to the operations that had not previously been considered.

So, our advice is if you are planning inventory-holding strategy change, make sure that your considerations are holistic and well thought-through. Ensure that any stakeholders affected by the change are aware in advance, and that there is sufficient expertise in place to be able to successfully model and consider the potential ramifications of the changes at an operational level. Not only will this help further reduce operational risk, but you may well find opportunities to reduce operational costs, or improve service-levels along the way.

Author: Harry Watts, commercial director, SEC Storage

For more information, visit https://sec-online.co.uk/storage/