Sometimes it takes a pandemic to make a point.
For years now, we have talked about the supposed tradeoff between managing for optimal inventory versus optimal availability. Typically, those goals compete against each other. Increase stock on hand, and your inventory costs go up. Minimize inventory carrying costs and the risk of lost sales due to stock-outs rise.
Thanks to the after-effects of the COVID-19 pandemic, supply chains have forced manufacturers to go beyond the basics of vendor-managed inventory and just-in-time deliveries.
Tactics “include tapping firms that specialize in buying and holding inventory for other businesses, as well as more traditional measures such as borrowing against inventory,” says the Wall Street Journal. And they aren't the only ones still discussing this. Channel Capital Advisors’ Steve Box tells the WSJ that companies “want to get as much liquidity as they can to get through this period and beyond.”
In our experience, some of these ideas just paper over a problem. Borrowing against goods, for instance, can be little more than the corporate equivalent of a payday loan.
Buying in Bulk Can Save You Headaches
As the world has recovered from COVID-19, the impacts are still felt today in the way supply chains handle their inventory. At Morgan, we see ‘inventory versus availability’ not as a burden to be managed. Rather, it’s an opportunity for transformation. With our own Inventory On Demand™ service, Morgan can buy goods on behalf of OEM clients at the factory or supplier dock and own them right up to the point of consumption.
That holding period is an opening to increase efficiency, whether that comes from consolidating shipments, shifting modes or redrawing distribution locations. By buying goods in bulk and keeping them on hand for the future, you can rest assured you will never run low on inventory when it is needed.
But the benefits are so much more than that. When you use Inventory on Demand™, you can source strategically to get the lowest possible cost from manufacturers. That alone can make some major changes to your bottom line. From there, letting Morgan take over ownership of the goods and store them until you need them can eliminate additional supply chain stress.
Unlock Efficiency
When your goods are ordered, Morgan transports them to the nearest key consumption points. By taking a look at your current supply chain route and analyzing your costs, Morgan can sometimes consolidate shipments, shift shipments to cheaper modes of transit and potentially even save money. By consolidating shipments, you can cut down on carrier spend while also taking an environmentally friendly route to your shipments.
Simple optimizations like this can unlock efficiency that can mitigate most expenses—and provide gains in customer satisfaction and supply chain resilience. Morgan's experts use decades of expertise to analyze your current supply chain and create a custom-tailored solution that works best for you.
Need a supply chain review? Contact us for an assessment at no charge.
