Companies Intentionally Inflating Inventory to Protect From Further Supply Chain Disruptions

Data complexity driven by poor data quality, siloed materials data and excessive legacy software systems stands as the most prevalent causes cited for poor materials management and planning in the supply chain industry.

Destina
Destina

Nearly 43% of businesses are intentionally inflating their inventories to protect against further disruptions, according to new research by Verusen. Data complexity driven by poor data quality, siloed materials data and excessive legacy software systems stands as the most prevalent causes cited for poor materials management and planning in the supply chain industry. The result is lost revenue and increased inventory costs. 

“As we approach 2022, many organizations are continuing to act in response to the global pandemic and the completely unforeseen situation it has caused. For most, this has resulted in massive revenue losses, materials shortages, inconsistent data and increased strain on networks around the world,” says Paul Noble, founder and CEO of Verusen. “Our new study on materials management and planning sheds light on the fact that the industry is seriously lagging in its response to address the challenges the pandemic has posed. Two out of three companies are using the same materials management business practices they used five years ago, while less than half are intentionally inflating their inventories to protect against further disruptions. That’s an unsupportable situation that needs to dramatically change if they want to remain in business and succeed.”

From GlobeNewswire:

 

●      90% of companies are focused on cost reduction and 75% are focused on operational risk reduction as their top procurement and sourcing strategies.

●       65% of companies' materials management strategies haven’t changed since the beginning of the pandemic, while 43% are intentionally inflating their inventories to protect against further disruptions.

●       Data complexity driven by poor data quality, siloed, disparate and excessive legacy systems are by far the most prevalent causes cited for poor materials management and planning.

●       42% of companies said a one-off data cleanse project is still the leading approach to improving their data, and 37% of respondents are still using common tools like Excel to optimize materials management.

●       When asked about the challenges to digitally transforming materials management, nearly 65% pointed to a lack of resources as the largest barrier, while 81% of respondents incorrectly believe that it would take well over a year to implement an AI-driven materials management solution.

●        Cost control around procurement remains a preeminent issue. Nearly 90% of respondents noted that their companies are focused on cost reduction, but at the same time, three-quarters also described a focus on operational risk. 

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