Stocking Up On Supply Chain Overflow

The COVID-19 pandemic is not only a health crisis; it has become an economic crisis as well. Entire supply chains have been disrupted and the logistics industry has been put under the microscope as communities have experienced empty shelves and long waits for medical supplies and essentials such as food, cleaning supplies and toilet paper.

Overall, logistics and supply chain systems in the U.S. have shown significant resilience to date in the face of this unprecedented challenge. However, experts expect that capacity and demand will continue to change as the pandemic plays out and measures to limit the spread of COVID-19 force most companies to adapt to a new normal.

Inventory Management Adaptations

U.S. manufacturers typically only hold about two weeks worth of inventory, so domestically focused food and packaging companies have been adversely affected by the pandemic. With factories in China closing or reducing capacity, some U.S. warehouses are left without supplies and others are dealing with overflow, which is a problem both for supply chain companies and manufacturers.

When China closed many of its factories in response to COVID-19, it reduced supply to U.S. companies, and their production fell both as a result of a lack of supplies and a sharp drop in demand. While companies can still buy and sell products, the supply chains they are dealing with are very different now. Plus, restrictive export policies of countries like China have created warehouse stock shortages that can affect prices for consumers.

There is also the challenge of keeping inventory for several seasons, ensuring there is inventory that will be waiting for distribution when needed. However, doing so means that when customers shop faster than trucks can deliver the products, store shelves are temporarily empty. Stores that can’t quickly increase their inventories after a surge in demand must stick to their normal replenishment plan and face the consumer backlash that comes from item shortages.

Having backup inventory in a warehouse during a pandemic and amid shipping delays and material shortages gives companies a clearer picture of their position. Using an exceptional warehouse stock management system directly or through a third-party warehouse space provider helps companies keep track of what was ordered and delivered, and to manage that data in a strategic manner that more accurately accounts for inventory fluctuations.

Inventory Overflow in Supply Chain Management

The consumer panic that can accompany a pandemic can cause warehouses to be either completely empty or overflowing with goods. What does this mean for the supply chain? How will it affect the future of retail? And what does it mean for consumers?

Businesses with production or inventory overflow will need extra space in order to adapt to both short and long-term needs in 2020 and beyond. Stocking up to the point of overflow helps build resilience into the supply chain in case suppliers or manufacturers are less able to meet current demand or if demand increases.

Managing Warehouse Overflow

There is clearly value in stocking up on inventory overflow during a crisis. But what kind of long- and short-term solutions are available for housing inventory or materials? Overflow can be tackled using two different methods.

The first solution involves creating and maintaining a process to better manage warehouse overflows in-house. The second involves obtaining more space.

If you currently do not have a location where overflow products can be stored, you should consider outsourcing your warehouse needs. Finding a warehouse overflow storage partner can be the best solution for managing warehouse overflow.

As a comprehensive supply chain solutions provider, NewStream Enterprises, LLC can build a warehouse or expand an existing facility to almost any custom capacity level. And it’s a common misconception that outsourcing costs more money. Partnering with us will actually save you money in the long run.

Labor, capital, infrastructure and transportation costs can all be decreased through outsourcing initiatives. Our unique business model and employee-owned company are the key differentiators from our competitors. An empowered workforce of employee-owners continually works to improve upon our efficiencies, which saves our partners money.

As COVID-19 has proven, global emergencies can arise when we least expect them. The world’s renewed awareness of that fact should remind us of the importance of inventory contingency plans.

Is your company looking for better ways to weather the storm and adapt to the times? If so, let NewStream give you the flexibility you need to manage overflow stock effectively and also assist with other logistics issues so your company can not only survive in these difficult times but thrive in the years ahead.