Inventory Management in the Age of Chaos

Planning for appropriate inventory levels is probably not at the top of your list of things that you love to do at work, though it is certainly one of the more critical tasks that a company and its people can execute. Planning well ensures that your company has the resources needed to operate smoothly while accounting for potential hiccups along the way. When done correctly, your company benefits from inventory levels that are just light enough to ensure that you do not have too much capital tied up in inventory but also allows for an amount of “safety stock” to provide a buffer, should you experience any variances.

At Material Motion, we are very familiar with inventory management

At Material Motion, we are very familiar with inventory management as it is a service that we provide for our customers of all shapes and sizes, from the publicly traded Fortune 50 company to the mom-and-pop business down the street. There are several things to consider when planning inventory, including: sales forecasts, seasonality, lead times, storage capacity, shelf life, and commodity price trends, to name a few. In the packaging industry, we are mostly focused on forecasts, lead times, raw material prices, and storage capacity. Take FIBC’s for example; this type of bulk packaging is custom manufactured to each individual company’s needs and typically takes about 4 months to be manufactured overseas in either India or China and then delivered via ocean container to a warehouse or directly to one of our customer’s locations. This means that 4 months is the minimum amount of inventory needed to make it through the lead time until the first lot of product can be delivered. Some of our customers prefer to order just enough inventory to cover the lead time plus 4-6 weeks of safety stock and then look at placing their next order when the first lot arrives; others opt for more frequent ordering of smaller stock levels that are continually replenished according to historical usages and any forecasts that they might have at their disposal. Both are acceptable forms of planning; the important thing is that you are taking the time to plan appropriately and ensure that you are covering all your bases. Another thing to consider is whether it is a better use of your resources to max out that space with packaging inventory or outsource the storage and transportation of your products to us, utilizing one of our 15 warehouses located across North America and the relationships that we have developed with top freight brokers and logistics companies.

Since we cannot seem to go a minute without being affected by it, let us go ahead and address the elephant in the room: the pandemic. Obviously, inventory management during any period of disruption can be very difficult, but the global disruption created by the pandemic has been a whole other animal. A lot has changed over the course of the last 10 months, including lead times, which for FIBC’s have now stretched from 4 to 6 months out of India and 3 to 5 months out of China. We are fortunate to have relationships with partners here in the US as well as in Mexico and South America that have helped us to ensure our customers valuable supply chain via significantly shorter lead times for custom manufacturing. This, along with the wide array of stock that we carry, have allowed us to provide stopgap solutions to help our customers get through periods of shortages.

Though we have surfed the waves successfully up until this point, we recognize that the pandemic and its lasting impacts are far from over. Lead times are continually changing, as our factories in the states and overseas are working through order backlogs and container shortages in Asia. We are grateful for our outstanding customers who have not only been understanding during this time but have worked alongside us to make this process run smoothly. Just another example of how we are all helping each other to get through this thing together.

Inventory Management in the Age of Chaos written by….

Material Motion, Inc.