5 relevant trends in supply chain management that relate to excess stock management
Here are 5 relevant trends in supply chain management that have a relation with excess stock management.
1. Increased focus on demand planning and forecasting
One of the key drivers of excess inventory is poor demand planning. When businesses overestimate demand, they end up with excess stock that they may struggle to sell. Conversely, underestimating demand can result in stockouts, lost sales, and missed opportunities. To avoid excess inventory, many supply chain managers are focusing on improving their demand planning and forecasting capabilities. This includes leveraging data analytics, machine learning, and artificial intelligence to better understand customer demand patterns and predict future sales.
2. Emphasis on agile supply chain management
In the wake of the COVID-19 pandemic, many businesses were caught off guard by sudden disruptions to their supply chains. As a result, there has been a renewed emphasis on agile supply chain management, which emphasizes flexibility and responsiveness. By adopting an agile approach, businesses can more quickly adjust to changes in demand, reduce lead times, and avoid excess inventory.
3. Greater use of just-in-time (JIT) inventory management
Just-in-time inventory management is a methodology that seeks to minimize inventory levels by only ordering and receiving goods when they are needed. This approach can be particularly effective in industries with fast-moving products, where excess inventory can quickly become obsolete. By reducing inventory levels and ordering more frequently, businesses can reduce the risk of excess inventory and free up capital for other purposes.
4. Increasing adoption of automation and digital technologies
Automation and digital technologies have the potential to streamline supply chain operations, improve inventory accuracy, and reduce the risk of excess inventory. For example, automated inventory tracking systems can provide real-time visibility into inventory levels, enabling businesses to quickly identify excess stock and take action to reduce it. Similarly, digital technologies such as blockchain can improve supply chain transparency and traceability, reducing the risk of inventory loss or theft.
5. Growing focus on sustainability and circular economy principles
Excess inventory can have negative environmental impacts, particularly if products are disposed of or go to waste. As a result, many businesses are adopting sustainability and circular economy principles in their supply chain management practices. This includes strategies such as product redesign, remanufacturing, and recycling, which can reduce waste and create new value from excess inventory.
In conclusion, these are some of the trends that have emerged in supply chain management, which relate to excess stock management. By adopting these practices, businesses can reduce the risk of excess inventory and free up capital for other purposes, while also improving their environmental sustainability and overall supply chain performance.