Companies are wrestling with how big their inventory should be. Many firms got stuck with too much inventory when COVID hit demand. Many firms are short of stock now due to rising demand and supply chain snafus.
Many companies plan to draw down stocks as supply chains recover with cost the key driver, but it’s not happening yet. Inventory for S&P 500 firms was 53% higher in 2Q21 than the 10-year pre-COVID quarterly average. Some manufacturers are rethinking inventory strategies. Drugmaker Incyte plans to decentralize stock to be closer to customers, giving them local stockpiles to dip into during supply chain strain. Swiss pharma, Novartis, aims to ensure each country it sells to has a second supply point for key products rather than relying on one location.
If you’re evaluating inventory strategy, MOSIMTEC’s supply chain simulations can help. There are many factors to consider – holding large inventory ties up capital, requires extra space and people to manage it and needs to be insured. It is also a problem for companies selling products with a sell-by date. Holding too little inventory risks getting stuck when times are tough. Explore multiple options/tradeoffs virtually to see what works best for you and your KPIs. MOSIMTEC can help.
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Read more here: https://www.wsj.com/articles/companies-grapple-with-post-pandemic-inventories-dilemma-11636290000