The world is facing unprecedented times as the effects and consequences of COVID-19 make their mark on businesses large and small. Many organizations are working hard to make the right decisions under extreme pressure right now. The situation can seem overwhelming, but there are some things you can do to navigate the supply chain disruptions. Peter Drakeley, Head of Customer Success at EazyStock, shares his best tips on how EazyStock customers can manage inventory during a crisis.
It depends on the industry, but as you say, pretty much all the companies I am talking to are affected and many sectors are having a very bad time. For starters, demand is very volatile. Obviously, companies selling to the hospitality or travel industries are seeing a very serious dip in demand. We are also very likely to see dips in industries like construction, automotive and manufacturing soon.
At the other end of the spectrum, other companies are seeing a demand increase at an unprecedented rate, like vendors of medical devices, protection equipment, or as we’ve all seen on the news, food! There are also the effects of people staying at home, where office supplies, entertainment and home gym equipment are all industries seeing a big spike in demand at present.
Secondly, as the pandemic is having a profound effect on global supply chain, sourcing stock can be difficult and, even if you can get stock, lead times are generally longer than normal.
Having control of your inventory will help you make better informed decisions, which can be critical in situations like this. Right now, you don’t want to take any premature actions based on your gut feeling … that doesn’t tend to end well. With a complete picture of your inventory, in terms of demand, current stock levels and what’s on order, you can quickly react to changing business circumstances, you can be on top of the situation and make more timely and rounded decisions.
Right now, many employees need to take time off, work remotely or handle unforeseen extra work. If any of our customers need support managing their inventory, we’re willing to help in these situations and will offer extra support to help them manage the situation. Please reach out to us if you need any support.
It may also be helpful to use EazyStock to automate more of your ordering processes. If there are any products that still have reliable supply and consistent demand, EazyStock can process those orders automatically to give you more time to focus on the more challenging parts of your range.
We can adjust EazyStock’s parameters to make forecasts more/less reactive and we have alerts around forecast accuracy and deviations from forecast which reevaluate with every demand update. The human aspect is also important here. Being able to talk to your customers and understand how their business is being affected can help you improve forecasting accuracy – incorporating such intelligence into the EazyStock forecast can be critical. EazyStock users can override forecasts completely, take specific demands out of a forecast (e.g. if a specific customer is really struggling), or adjust forecasts with additions, subtractions and percentages.
EazyStock’s risk-of-run out report is a good way to notify you when you’re running out of stock. If you use the report, you can be smart and proactive with the remaining stock; for example keeping some of it back for urgent or critical customers.
When deliveries start to get back to normal, EazyStock can help you decide what you need in order to meet increases in demand of products that may have been hard to get hold of for a while.
EazyStock also has a dynamic lead time functionality which can track variations in product lead times, giving you a quantitative view of supplier performance (based on actual delivery data). This can be very useful as your suppliers start to return to normal as the pandemic abates. Obviously while we are in the midst of the pandemic with suppliers coping with a variable workforce and inconsistent supply, the numbers might not be overly reliable – things are changing everyday – but my perspective is that any data can add value. For example, even if the current dynamic lead time is not right, maybe the longest lead time of the last eight weeks is useful for worst-case planning.
As mentioned earlier, some sectors are being hit really hard and, unfortunately, the demand for products may have died completely or decreased dramatically. In situations like this, EazyStock will identify your excess inventory so that you can create a plan. In normal circumstances you would want to get rid of excess stock before it becomes obsolete, but given the current business climate, you may want to keep hold of that stock until things return to normal. Knowing your likely levels of excess stock means you can make a plan to store it and also better understand what it means to have that amount of working capital tied up in inventory that you will probably not sell for the foreseeable future.
To help cope with working capital issues, EazyStock has capabilities to simulate different stocking policies. This means you can model what-if scenarios such as, “What if I stop stocking a specific group of products, what will that mean for my total inventory investment?” etc. This type of business modelling/intelligence can be very useful as resources become constrained but also when things start moving again and you begin to reevaluate your stocking portfolio.
For some businesses, demand is spiking drastically. This can be products like medical supplies, home entertainment and home office items. Here, again, the risk of run out report in EazyStock will tell you when you are low on stock for specific products. The system will also give you alerts when the demand deviates from your forecasts, so that you can quickly spot potential spikes and take proactive action.
We’ve already highlighted the dynamic lead time and risk of run out report. Both of these reports will highlight those products where you have the most issues with supply; for example, if you see an item appearing on the risk of run out report every week, you know it’s a big problem for your suppliers. That may be a good indicator that you should talk to your suppliers about it and maybe even seek alternative sources of supply.
EazyStock also has an order schedule capability that can project orders into the future – most companies look ahead for 12 months. While it’s unlikely to be very accurate across your whole range at present, there may be some items – those items still likely to have consistent demand – for which it is accurate. For these items you can send the schedule to your suppliers and then spend your time focusing on the more challenging parts of your portfolio.
EazyStock will automatically change stocking policies at your warehouses as the demand in different locations changes. This way, you won’t have to think too much about how you should change the distribution of inventory across warehouses.
You can also use EazyStock to redistribute inventory across your locations, to make the most out of your existing stock and minimize the risk of run out in locations where the demand has gone up.
This is where you really don’t need to do much if you’re using EazyStock. The system is automatically changing stocking policies, safety stock levels and reorder points for you. This means that you can spend your time and resources on other, more urgent things to get your business back on track.
It’s very difficult to prepare for extraordinary situations like this and EazyStock is no silver bullet. However, from an inventory perspective, our customers are well placed with a proactive, intelligent system to cope as well as possible with these unprecedented times. Our consultants and partners are also here to help. We are committed to doing whatever we can to help our customers and the world come through this situation ready to take on whatever comes next! We are here and willing to help!