In today’s increasingly complex global environment, supply chain leaders must rethink traditional operational models to remain agile and resilient. As post-globalization dynamics, climate-related disruptions, labor challenges, and inflationary pressures reshape the landscape, a shift toward more strategic, data-driven supply chain management is imperative.
According to Hernan Saenz, Global Head of the Performance Improvement Practice at Bain & Company, legacy supply chain models are no longer sufficient:
“The way we have done supply chain in the past is probably not going to work in the future.”
Here are four key strategies for supply chain and operations leaders to adopt in 2025 and beyond.
1. Stratify Inventory and SKUs
In the face of ongoing disruptions, agility and adaptability in supply chain operations are crucial. One effective approach is SKU stratification, which enables organizations to optimize inventory portfolios based on value, demand velocity, and strategic importance.
FDH Aero, an aerospace parts distributor, previously pursued a volume-based purchasing strategy, prioritizing deals over long-term inventory value. However, with rising capital costs and inflation, the company pivoted.
Bob Loycano, VP of Supply Chain at FDH Aero, noted:
“We began segmenting our inventory to understand which SKUs deliver the most value and which ones move fastest. This has enabled us to make more informed investment decisions.”
The company revisits its SKU segmentation strategy quarterly to align with contract changes and uses the analysis to reorganize warehouse layouts—placing high-velocity items near dispatch points and slower-moving items in less accessible locations.
2. Balance Just-in-Time and Just-in-Case Inventory Models
While Just-in-Time (JIT) inventory models offer efficiency in stable environments, they can be highly vulnerable during periods of volatility. The COVID-19 pandemic exposed the limitations of JIT, prompting many firms to adopt a Just-in-Case or hybrid approach.
Saenz emphasized:
“In turbulent environments, JIT gets you into trouble very quickly.”
FDH Aero now prioritizes buffer stock for high-value, high-demand SKUs, particularly due to extended lead times.
Loycano explained:
“Lead times that once took six months now stretch beyond a year. We can’t afford to be caught off guard, but at the same time, we avoid overstocking low-velocity items—tying up capital in slow-moving inventory is not a sound strategy.”
3. Leverage Artificial Intelligence for Demand Planning and Forecasting
While demand forecasting is not a new concept, the application of Artificial Intelligence (AI)—especially Generative AI—offers transformative potential for accuracy and efficiency.
R. Ravi, Professor of Operations Research and Computer Science at Carnegie Mellon University, remarked:
“Prediction is bound to get better with AI.”
AI technologies can process and interpret unstructured or previously overlooked data, enhancing planning accuracy. In manufacturing, AI is increasingly being deployed for predictive maintenance, interpreting sensor signals to anticipate equipment failures and optimize maintenance schedules.
A 2024 McKinsey & Co. survey of 88 supply chain executives found that 74% have implemented or are planning to implement AI in demand planning.
Ravi cautioned, however:
“Technology should solve real problems. Before investing in AI, ask yourself why you're doing it—not just because it's the latest innovation.”
4. Conduct Zero-Based Strategy Exercises
To future-proof supply chains, leaders must adopt a zero-based approach, re-evaluating operations from the ground up rather than iterating on legacy systems. This is particularly relevant in an increasingly non-linear and unpredictable global context.
Saenz explained:
“We’ll never get out of chasing our own tail unless we step back.”
Zero-basing involves rethinking operational design, such as reconfiguring warehouse layouts or selecting optimal inventory tracking technologies, not based on past configurations but on ideal solutions for current and future needs.
This approach enables organizations to proactively build disruption-resilient supply chains, instead of reacting to failures after they occur.
“The profession is going to get a lot harder, but also a lot more interesting,” Saenz concluded, pointing to a broader shift from tactical execution to strategic planning in supply chain management.
These four strategies represent a critical evolution in the way companies manage supply chains—highlighting the need for smarter segmentation, balanced inventory strategies, digital transformation through AI, and foundational rethinking of operational models.
Source: https://www.supplychaindive.com/news/4-inventory-management-supply-chain-operations-best-practices/743461/
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