During the COVID-19 pandemic too many supply chains — predicated on lean inventories — broke down sooner than they should have. Meanwhile, since the pandemic’s impacts are now easing, product companies are now stuck with surplus inventories of items that sold well during the pandemic but are no longer. In this column I discuss how the Just-in-Time mindset and overly-focusing on Return of Assets fosters an unfairly negative view of inventories. I argue that this mindset needs to be revisited in light of the lessons taught to us by COVID. I also distinguish between ‘good’ inventory and ‘bad’ inventory and the many reasons to hold ...

From Issue: The Finance of Forecasting (S&OP is Only the Start)
(Fall 2022)

Learn to Respect ‘Good’ Inventories: Rethinking Lean Methodology