Inventory management has always been a balancing act, but recent challenges have thrown many North American businesses into a tailspin.
Unipart Logistics has taken a closer look at the issues plaguing companies across North America, and explored solutions that can turn this headache into a competitive advantage.
The post-pandemic inventory hangover
Inventory challenges have long been a concern for businesses, but the COVID-19 pandemic did expose and amplify numerous inefficiencies in the supply chain.
The pandemic acted as a catalyst in the poor inventory management that many companies are currently facing – mainly leaving businesses with mountains of excess inventory.
Science Direct reported in 2024 that since the onset of COVID-19, 47% of respondents are holding more inventory, and 58% intend to diversify their sourcing strategies to mitigate supply chain risks.1
This excess inventory is now taking up valuable warehouse space, and increasing the risk of obsolescence. Alongside this, not only is it harder to get inventory levels back to normal, but it is also affecting business profitability – it stands to reason that the longer inventory sits on a shelf, the more value it loses and the more it costs for a business to hold.
Joris van der Smissen, Director of Business Development for North America explains the issues our USA customers are facing with excess inventory. “The challenge of excess inventory is a complex one, with root causes ranging from inaccurate demand forecasting to supply chain disruptions. Companies are seeking innovative solutions to optimize their stock levels and avoid the financial burden of excess goods.”
Wrong stock, wrong place, wrong time
And, beyond overstocking, many companies are grappling with inventory mismatches across the US. Stock might be languishing on the East Coast when it’s desperately needed on the West Coast, or businesses don’t have the warehousing capabilities in the locations they need it most, or worse, businesses don’t even know where their stock is. 
This misalignment makes it impossible to meet service level requirements for both customers and suppliers. Whether it’s next-day delivery or just-in-time manufacturing for factories, poor inventory management and a lack of visibility across the supply chain creates a domino effect of delays and dissatisfaction.
Visibility across the supply chain has proven to be a real challenge with inventory management, but Procurement Tactics reports that “while supply chain visibility is a top strategic priority for companies worldwide, only 6% of companies reporting full visibility on their supply chain.”2
Knowing where stock is in the supply chain at any moment in time, helps to not only reduce disruptions, but also increase efficiency and ensure stock is in the right place, all supporting businesses to get a handle on inventory management.
One way that companies are looking to support their supply chain visibility is through the services of Lead Logistics Partners. As Joris continues, “The growing complexity of supply chains has made it challenging for many companies to maintain control over their inventory. LLP services offer a global supply chain visibility solution by providing the data-driven insights and actionable analytics required for effective inventory management.”
The data dilemma
But, where businesses have access to supply chain visibility and data, most are drowning in information and unable to extract truly meaningful insights. But using the right data insights is crucial to making informed decisions and supporting business growth.
While warehouse managers may be aware of problems like late deliveries, overflowing warehouses, and damaged goods, the underlying causes remain elusive. This lack of understanding of the data hinders effective decision-making in order to minimize these risks.
However, using advanced data analytics is something that must be understood. This type of vital information can accurately forecast future demand and support inventory management. By analyzing areas like past sales patterns, lead times, and seasonal fluctuations, these systems empower businesses to optimize inventory levels and ensure products are available where and when customers need them.
And Joris explains the impact of not embracing data analytics in inventory management. “Businesses that fail to leverage data analytics for inventory management risk falling behind their competitors. By neglecting data-driven insights, companies may experience stockouts, excess inventory, and disruptions to their supply chains, ultimately impacting their bottom line.”
AI, data analytics, automation, machine learning, and blockchain to name a few, illustrate that the smart supply chain is the new normal. More importantly, as KPMG explain, those who are ready and willing to adapt quickly (to this new normal) will be better able to unlock value, reduce costs and embrace new models of success.3
Where to start?
But where should a business start, if current inventory management isn’t optimized?
- Understanding current inventory levels, through network and inventory analysis, enables future demand forecasts, and optimal stocking locations. This analysis can reveal whether a business needs new warehouse locations, adjustments to existing ones, or simply better allocation of stock.
- Don’t just collect data – understand it. Knowing what data can help identify key performance indicators like inventory turnover, stockout rates, and order cycle times can pinpoint areas for improvement.
- Is stock in the right place, at the right time? Review current locations. Does the business need bigger warehousing solutions in less locations? Or smaller warehousing solutions in more locations? Think about if the current set up is supporting or hindering service level requirements for customers and suppliers.
- Every business is unique. Partnering with a logistics provider like Unipart Logistics can help implement tailored custom solutions, ranging from simple tracking systems to full-fledged LLP solutions.
The imperative of control
In the wake of recent disruptions, effective inventory management has never been more critical for North American businesses. By addressing excess stock, optimizing inventory placement, and harnessing the power of data-driven insights, businesses can turn their inventory from a burden into a competitive edge.
Ready to transform your inventory management and drive your business forward? Unipart Logistics North America has developed state of the art systems and processes to manage these challenges and to help companies re-balance their inventories.
References
- Science Direct, Supply chain resilience: A review from the inventory management perspective, 2024
- Procurement Tactics, Supply Chain Statistics — 70 Key Figures of 2024, 2024
- KPMG, Supply chain trends 2024: The digital shake-up, 2024