COVID-19 and Supply Chain Inventories

COVID-19 has brought many industrial and social activities to a screeching halt.

This has resulted in the demand for certain essential products, including medical and hygiene products, skyrocketing. All the while, the consumption for less essential items or those impacted by the closures, slumps.

Inventory is an asset as long as it keeps moving and is bringing revenue. The Quick Ratio, also known as the litmus test, rings true in such times. Stopped in its tracks, inventory can lose its value, sooner for some items than later. And depending on the product’s shelf life, consumer trends and seasonality can also be impacted. Merchandise stuck in warehouses, and work-in-process stacked on factory floors is a supply chain manager’s worst nightmare.

Among the top businesses worst hit by the COVID-19 Pandemic are restaurants, the travel industry, and live sports. All of these, and more, are impacting perishable commodities and capital-intensive capacities.

While capacity once lost cannot be recovered in many cases, inventory shocks can be mitigated by strategies such as: redirecting, repurposing, safe storage, delayed differentiation, and donating. These are tough decisions to make and test an organization’s agility as well as a sense of social responsibility.

Companies that have robust decision-making processes such as Sales & Operations Planning are quick to respond, while others reel from one shock to another. Investment in training and continuous improvement during peace and prosperity pays off at the time of crisis. While supply chain visibility and coordination cannot be kick-started in a panic mode, it is never too late to take a hard look at priorities and invest in resource development, as soon as possible. Teams that work together, grow together.

Related: COVID-19 – Impact on Global Supply Chains

Contributed by:

Aftab Khan, CISCOM

aftab khan
Aftab Khan

Aftab Khan is a logistics specialist with over forty years of experience in all aspects of supply chain and logistics management. He is an engineer by training and holds an MBA, besides several certifications from APICS/ASCM, ISCEA, and BRASI. Mr. Khan is the Executive Director of Business Research and Service Institute LLC, USA.

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