Just-in-time and lean inventory strategies may have served their purpose in the past, but today’s supply chains are changing their collective mindset to prepare for unforeseen disruptions, says Christine Barnhart, Vice President of Strategy and GTM at Checked.
Lean and just-in-time inventory strategies were all the rage in the 1990s as companies focused all of their efforts on cutting costs. This consideration also led to much of the manufacturing being sourced from distant lands with cheap labor. And while there may have been a good rationale for the approach at the time, it’s time for a change of strategy, says Barnhart.
The COVID-19 pandemic and resulting supply chain congestion, not to mention geopolitical tensions and the trade war between China and the United States, have exposed the shortcomings of an inventory model. Lean. “What we see today,” says Barnhart, “is largely a reflection of that myopic focus on Lean and JIT for much of the past 20 years.”
Today, the push for a more nuanced approach to inventory and production is accompanied by a realization of the need to abandon manual methods of data management and embrace digital technologies. Barnhart cites artificial intelligence, machine learning and natural language processing as key elements in the transition to new systems that can make sense of disconnected data and bring a new level of harmony to global supply chains. . Today’s tools allow supply chain managers to aggregate a flood of data from multiple disparate systems.
Barnhart says AI and similar technologies are growing in importance in response to the current labor shortage, caused in part by a wave of baby boomer retirements. “All of this information and knowledge comes out,” she says. In response, companies are looking for systems that can “institutionalize” critical data.