In the late summer of 2020, I was honoured with the opportunity to interview supply chain guru Deborah Dull, not just once, but three times. While all the interviews are available to view on the Supply Chain Secrets YouTube channel, I decided to create some brief articles from the transcripts.
After all, some people prefer to learn by reading, and in any case, you might find the transcripts helpful to cement the critical points of the interviews in your mind for future reference.
Having published two of the interviews already in the last few weeks, I’ve gone ahead and written up the final one for you, in which Deborah talks about some key things that supply chain professionals get wrong when dealing with inventory. So let’s get right into it.
3 Things Supply Chain Pros Get Wrong in Inventory Thinking
Rob: So, Deborah, what are some things that people get wrong with inventory?
Deborah: Well, before I get into that, I’d like to share my advice for considering inventory. Take a look around you wherever you are as you watch, listen, or read this interview. Every single thing you see is inventory.
When you bought something that you can see within your field of vision, an inventory analyst somewhere in the world freaked out because you didn’t buy the one she thought you would. You bought another one.
We, ourselves, are inventory too, and when we talk about turning tables, well, the table’s inventory also.
1: Forgetting Our Forecasts Will be Wrong
Of the three areas that I think we often get wrong, or we forget we knew at some point, the first one is that we are, in fact, wrong in our forecasts. So we make our forecasts or plans, but we will be wrong, and we know that because we’ll consider a forecast confidence level.
Yet somehow, we’re still surprised when our review period comes around. It’s like, “Oh gosh! I forgot we were going to be wrong in our forecast.” Planning around the “wrongness” is something I see us consistently failing to do. Across the supply chain we know we’ll be wrong, but we don’t plan much to counteract the deviance that we see. That brings me nicely to the second one.
2: Only Thinking About the Upside of Scale
We often talk about scale. You know, “How does this scale?” “Will this process scale?” and so on. But typically, we’re always talking about the upside. When we talk about risks in the supply chain, of course, you can have upside and downside, but I don’t see many supply chain practitioners talking about downside risk or scaling down.
Currently, supply chains worldwide are probably seeing either a sharp upside that is shocking and difficult to keep up with or an absolute turnoff in demand and a severe downside. So it’s interesting to start challenging the decisions you’ve made in setting up your supply chain.
For example, how flexible is your network? How variable are your variable costs? Have you committed to some minimum volume that makes it difficult for your supply chain to flex, for example?
3: Trigger-happy Decision Making
The third one takes a bit of boldness to correct, but it’s the habit we often get into as planners to front-load our decisions and assumptions about inventory. The best practice is to wait as long as possible to make these decisions because the longer we wait, the less wrong the decision is likely to be.
Front-loading the decisions makes it as challenging as possible to react to market fluctuations. For instance, let’s say you’ve made a million widgets in pink, and it turns out consumers want it in blue. You’ve already made the decision, and the pink widgets are made. So then you have a whole host of other cleanup decisions to make.
A Shout-out for the Supply Chain Revolution
Rob: Deborah, I think that’s an excellent summary of some things people get wrong in inventory management. Is there somewhere that people can go to for more information on this?
Deborah: Yeah, my podcast is called Supply Chain Revolution. We exist to connect supply chain professionals who may not have traditionally found each other. So, for example, if you’re not seeing many supply chain colleagues who act, think, and look like you, we’re your people.
The whole idea here is to remedy the underrepresentation that doesn’t reflect the supply chain industry accurately at conferences, on panels, in journals, and among leaders.
In doing that, we cover topics including sustainability, circular economy, sustainable development goals, and what we call new-school supply chains—and of course, one of those topics that we look at is, in fact, inventory.
Take Stock of Your Inventory Thinking
I have to admit, before interviewing Deborah, I’d never thought of myself as inventory, but what she says is true. We, along with just about everything we see, can be considered as inventory, and when we do view it that way, it can trigger a shift in the way we perceive its management.
Perhaps it’s time, then, to reconsider how you think about inventory. But, whether you do so or not, at least you have had some due warning of three mistakes to avoid in inventory management—from somebody who knows the business inside out.
Revisiting these interview transcripts reminded me of the absolute pleasure and educational experience of talking with Deborah Dull and her Supply Chain Revolution co-host Sheri Hinish. I hope you found it as inspiring as I did. If so, remember to watch out for more interviews with the experts on our YouTube channel.
Why not stop by right now to view this interview and browse through the vast library of informative supply chain material that’s growing there? And don’t forget to subscribe while you’re there.