b'SUPPLY CHAIN CHALLENGE CSIA 29which too often have become just-too-late failures, and stockpile more suppliesbothintheUnitedStates and abroad, says John Manzella, a consultantonglobalbusinessand economic trends, East Amherst, NY (JohnManzella.com). This approach reduces efficiencies but favors risk reduction.Companiesarewillingtoturn upside down the traditional views of inventory control, given the increased riskofshortagesandcustomer goodwill.Manycompaniesare cost of electronic equipment has gone down, saysinvesting more cash in inventories, and banks seem Conerly. Something that did not pencil out a fewcontent with lending against that, says Hannan. years ago may well do so today.While businesses must pay the price for bolstering New Strategies inventorylevels,suchcostsmustbebalanced againstoperationalexpensessuchastheneed Companiesarerespondingtothesupplychaintopayhigherpricesforgoodswhenacompany challenge by doing more with less, running machineryscrambles to fill customer ordersor lost revenues beyonditsprimeandcollaboratingwithvendorswhenanunhappycustomerjumpsshipfora topredictshippingdelays.Suchmovesstrikeacompetitor.Astheybalancesuchcosts,many familiarchordwithPalisinatthemanufacturerscompanies are viewing higher cashflow on the shelf association. The pandemic has really highlightedas acceptable. Risk mitigation has become more the need to develop strategies to mitigate potentialimportant than efficiency gains, says Manzella.disruptions in the flow of critical components, says Palisin.ThatmeansdoingadeepdiveintotheFurthermore,threehistoriccostsofinventoriessupply chain, mapping the geographical locationsinterest, obsolescence, and shrinkageno longer of the first tier of suppliers and learning about theuniversallyapply.Theinterestrateyougetfor reliance of second tier as well. having cash in the bank now is approximately diddly squat, says Conerly. And obsolescence would only Pandemic-related shortages have affirmed the needbe an issue if something were expected to go out of for backup vendors even for lower volume items.fashion. Many products in short supply today are Instead of relying on one supplier, a company mightthe same products as last years model and they havethreetomanagerisks,saysJimHannan,are not going to go obsolete. Shrinkage, he adds, Practice Leader of Manufacturing, Distribution andis not an issue in some industries and in others can Logistics service group at consulting firm Withumbe controlled with requisite security steps.(withum.com).Weexpectthistrendtocontinue with the advent of environmental, social governanceCheap or not, inventory storage must be allocated (ESG) standards at larger companies. selectively. Companies need to be thinking, what might be in short supply when we try to ramp up When deliveries are spotty, companies are temptedour production? says Conerly. They may well buy to keep more stock on hand. Companies shoulda years supply of a relatively cheap item that is a no longer rely on just-in-time inventory strategies,small part of what a company uses but is vital to continuedpg.30csiaonline.org'