Supply Chain Digital: Increasing Inventory to Boost Customer Loyalty

Dec 14, 2021

(Image Source: Supply Chain Digital)

The latest report published by McKinsey shows that expanding inventory is the top choice solution of businesses during the pandemic, over resilience strategies like near-shoring and onshoring. According to the survey in 2020, most firms plan to attack the supply chain difficulties in diverse approaches including increase in inventory, diversify supply bases, localization or regionalization.

In fact, companies are more likely to increase their inventory than most. 61% actually picked that option even though only 47% were planning to do so in 2020. In contrast, the supplier base solution isn’t as common as expected with only 15% having implemented these strategies.

The Healthcare sector is leading the way in applying resilience solutions. However, automotive, aerospace and defense companies are less likely to take this approach (22%) despite 76% of them saying they prioritize this in 2020. 

According to McKinsey, the ease of restrictions worldwide might explain this shift towards inventory. Another reason is that this is the best way to keep customer loyalty, which relies heavily on product availability. Other key findings in McKinsey’s report include: 

  • 95% have prioritized a formal supply chain risk-management process 

  • 59% of companies have adopted new supply 

  • 4% have set up a new risk-management function from scratch

Source: Pandemic prompting firms to increase inventory – McKinsey

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