Having the supplies your business needs to operate on hand at all times and managing that inventory on a daily basis is a big job under typical circumstances. Add to that unexpected supply chain disruptions due to a global pandemic, and you now have the potential for delays or even business disruptions.
Grainger wanted to learn how the pandemic that began in 2020 has impacted our customers so far and what they are doing to adapt, so we ran a survey. Respondents reported that lead times were impacted the most, followed by managing inventory. Other issues they identified included increased competition for similar items, logistical supply chain issues and other significant challenges to day-to-day operations.
The online customer survey, which ran from November to December 2020, also aimed to highlight the key trends and technology helping to transform supply chains in 2021 and beyond. Respondents were asked a variety of questions to get a sense of how their businesses have been affected by the pandemic:
- What are today’s technological developments that are changing inventory management? How do these tools help to address key challenges?
- How has the Internet of Things (IoT) changed the way inventory is tracked and managed now and in the near future?
- How has the pandemic due to COVID-19 impacted the supply chain and what challenges has it created for inventory management specifically?
- In different industries, does emerging technology change the types of skills, accreditation, and/or continuing education needed by successful employees?
How COVID-19 Disrupted Inventory Management
Disruptions in the supply chain due to the coronavirus pandemic have significantly impacted inventory strategy and supply chain management. While 84 percent of professionals surveyed reported being essential and never shut down, many have felt the pandemic’s impact on their day-to-day roles. A majority of respondents reported having to spend more time searching for unavailable items, finding new products to address the virus, and managing delivery delays.
Fifty-Five percent of respondents pointed mainly to lead time, followed by inventory, as having the biggest impacts from the pandemic.
One respondent reported, “The major impact is from the supply chain because of the staffing issues throughout the network, of getting supplies on time and supplies getting delayed if there are facility breakdowns. How we’ve planned, we’ve kept additional inventory.”
Due to supply chain disruptions, our survey found some companies are now shifting to just-in-time (JIT) inventory to keep the carrying cost of inventory off their company financials. Other companies are carrying more buffer stock of critical pandemic-related items that have been difficult to source. According to one respondent, “Everybody at the beginning was competing for the same items, and our strategy was to centralize that, as opposed to having individual sites try to manage it themselves.”
While a majority of respondents (67 percent) have seen a moderate to high impact from the pandemic on their inventory planning, only about a third have shifted to rely more on real-time data.
Companies are also starting to focus more on connectivity and the integration of legacy systems via the IoT. Thanks in part to greater network connectivity, companies are beginning to rely more on real-time data and data analytics to increase end-to-end supply chain visibility and help identify and actively address potential supply chain disruptions. As one respondent noted, “There is a lot more digitization—different types of sensors, IoT, RFID, GPS tracking for example on trucks to figure out where things are. And they are using that to sort of drive intelligence, intelligent decision making in the supply chains.”
About a quarter of professionals surveyed see future trends in real-time inventory data and logistics with technology such as analytics and IoT impacting their company most in the near future.
According to one logistics professional, “The concept that supply is driven basically by the customers is really what IoT can allow you to do. End consumers can essentially dictate the supply as opposed to trying to keep back up with it. That visibility, especially when it comes in a retail setting, and enabling that, is really the game changer when it comes to using IoT.”
Our research found inventory and labor issues related to the pandemic have rapidly increased the urgency for businesses to consider adopting emerging technology like the IoT and robotics. Future supply chain trends have also emerged to help combat labor shortages and supply chain disruptions, such as blockchain and digital asset optionality, machine learning and 3D printing. However, several respondents noted the high investment costs and legacy warehouse management systems have previously been major barriers to moving quickly with this emerging technology in today’s market.
As for the types of skills, accreditation, and education needed as the supply chain becomes increasingly digitized, 67 percent of respondents agreed there is a changing need for new skills/workforce education due to emerging technology.
While respondents found it difficult to identify future trends or predict precise company needs, they acknowledged many companies are now focusing on building new technical skills on the job, tailoring skills to specific systems, or as additional "nice to have" but not required certification.
Preparing for a Post-Pandemic World
Throughout 2020, businesses have faced unprecedented challenges, constant unpredictability and operational changes related to the COVID-19 pandemic. The global economy and workforce has been deeply affected by supply chain disruptions making it increasingly difficult to secure the products and services that were once readily available.
As businesses look ahead to a post-pandemic world, one thing is clear: leaders must continue to guide their organizations through uncharted waters by finding new and innovative ways to adapt to supply chain issues and ever-changing consumer demand.