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Feast or Famine: Tips for Inventory Management in 2022


Inventory management in 2022 is a tale of feast or famine, the haves and have-nots.

On one hand, we’re seeing shippers burst at the seams with inventory. Far past a comfortable capacity (about 85%, per industry standards), these shippers are faced with serious efficiency roadblocks. Overcrowded warehouses mean inefficient labor in an already challenging labor market. As inventory bleeds into overflow warehouse space as needed, these shippers are forced to pay rent in two locations and incur the costs of transporting inventory back and forth, plus deal with the operational headache of managing products in two places.

On the other hand, there are shippers grappling with half-empty warehouses as they struggle to obtain raw materials to make their products. These shippers are not only burning money on unused warehouse space, but also facing a serious customer service issue. If they have products to dole out at all, many shippers with scarce inventory are forced to ration products to customers and only fulfill a portion of their orders. For customers like Walmart, Target, etc., this can result in hefty fines for shippers. On the consumer side, this causes frustration and can damage brand reputation.

This dichotomy defining inventory management today is caused by several overlapping variables: the labor shortage, pandemic, clogged ports, raw materials shortage, etc. For shippers on either end of the spectrum, there is no one easy answer. However, mastering inventory management with a strong strategy can help shippers avoid additional costs and customer frustration.


Lean Warehousing Principles

Lean warehousing is the operational state of nirvana we’re all striving towards. As a key foundational strategy, lean warehousing focuses on eliminating waste in all its forms, touching products as little as possible, and driving efficiency.

Needless to say, it’s easier said than done, and external circumstances often make it difficult for shippers to achieve the optimal lean warehouse.

Shippers are continuously trying to determine the right amount of safety stock to keep on hand, and the pendulum will always swing back and forth between just-in-time and just-in-case inventory strategies. A lot depends on the current market and the shipper’s specific needs. No matter the strategy shippers are currently adopting, strong inventory management is about creating a foundation of stability so they can be agile amidst change.


Tips for Better Inventory Management:

Having a clear inventory management strategy, and then managing in alignment with that strategy, is the most important thing shippers can do to maintain control in today’s volatile market. Below are five considerations for better inventory management that we’ve found most useful for our customers:

  1. Get Creative with Space: Multi-client solutions can provide value to shippers on either end of the inventory spectrum. Shippers with unutilized warehouse space can sublease that space for a period of time to offset real estate costs, and conversely, shippers in need of overflow storage can take advantage of these short-term leases in a tight real estate market.
  2. Perform Data-Backed Inventory Optimization: Inventory management is a science that requires lots of data. By strategically leveraging that data with the right partner and tech stack, shippers can optimize their inventory planning to determine how much stock is needed based on demand, what a healthy amount of safety stock looks like, and where that stock should be located for the greatest cost-effectiveness.
  3. Identify Trends and Build Predictors with Data Analytics: Strong data analytics and artificial intelligence (AI) can leverage historical data, analyze trends, and create predictors to anticipate possible inventory accuracy problems. This allows shippers to get ahead of problems and provides more comprehensive end-to-end visibility.
  4. Focus on Labor Efficiency: Labor, like space, is a scarcity in today’s supply chain. In situations where shippers are grappling with full and/or overflow warehouse spaces, using a labor management system can help drive operational efficiency and identify opportunities for workforce optimization.
  5. Leverage a 3PL Relationship: With a wealth of experience and industry expertise, a trusted 3PL can help shippers apply all of the above considerations based on their specific needs to drive better business outcomes.


Trends Towards the Future

The last two years have been fraught with risk and disruption, and shippers are on the hunt to future-proof their supply chains to avoid repeating past mistakes.

Many of today’s inventory struggles are rooted in the inability for shippers to find enough workers amid a labor shortage. As such, the market is trending towards innovative technology that augments human labor and keeps supply chains agile: automation, robotics, and advanced analytics. The pendulum will always swing back and forth between more or less safety stock, but investing in strong technology now can help provide the stability that the supply chain needs.

To speak to an expert or learn more about building stronger inventory management, visit Kenco’s Supply Chain Consulting page.


We'd like to hear about your supply chain and discuss ways Kenco can help address your business needs.

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Kenco Logistics

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Kenco provides integrated logistics solutions that include distribution and fulfillment, comprehensive transportation management, material handling services, real estate management, and information technology—all engineered for Operational Excellence.