As the business landscape adjusts to post-pandemic conditions, companies in the consumer goods sector are reevaluating their inventory strategies for increased profitability and efficiency. The following article is based upon research and data provided by Alix Partners, on their original article Consumer Products Corner – Supply Chain Check-Up: Inventory goes lean ahead of holidays. For queries or further discussion, you’re welcome to reach out via email at [email protected].
In the midst of the pandemic, businesses increased their stock levels to counterbalance disruptions in the supply chain. However, as costs decline, delivery speed picks up, and manufacturing facilities become more accessible, various sectors in the consumer goods industry are downsizing their inventories, aiming for enhanced profitability in the near term.
Moreover, the adoption of advanced factory technologies, including automated stock management and predictive analytics for optimizing inventory based on data, empowers companies to trim inventory levels further while more proactively meeting demand through “just-in-time” methods.
This strategy gains significance as factors like inflation, interest rates, and student loan repayments exert pressure on consumer expenditures, resulting in slower inventory turnover. With the unpredictable nature of upcoming holiday shopping seasons, even as consumer spending holds up better than expected, companies are cutting back on inventory to minimize the risk of surplus. Is this the appropriate course of action?
