Just-in-time and Lean inventory strategies might have served their purpose in the past, but supply chains today are shifting their collective mindset to brace themselves against unanticipated disruptions, says Christine Barnhart, vice president of strategy and GTM with Verusen.
Lean and just-in-time inventory strategies were all the rage in the 1990s, as companies focused all of their efforts on minimizing cost. That consideration also led to the sourcing of much manufacturing to distant countries with cheap labor. And while there might have been a good rationale for the approach back then, it’s time for a change in strategy, Barnhart says.
The COVID-19 pandemic and resulting supply chain congestion, not to mention geopolitical tensions and the trade war between China and the U.S., exposed the shortcomings of a Lean inventory model. “What we’re seeing today,” says Barnhart, “is very much a reflection of this myopic focus on Lean and JIT for the better part of the last 20 years.”
Today, the push for a more nuanced approach to inventory and production is being accompanied by a realization of the need for scrapping manual data-management methods and adopting digital technologies. Barnhart cites artificial intelligence, machine learning and natural language processing as key elements in the move toward new systems that can make sense of disconnected data, and bring a new level of harmony to global supply chains. The tools of today allow supply chain managers to aggregate a flood of data from multiple disparate systems.
Barnhart says AI and similar technologies are growing in importance as a response to the current labor shortage, caused in part by a wave of retiring Baby Boomers. “All that information and knowledge is walking out the door,” she says. In response, companies are looking for systems that can “institutionalize” critical data.
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