Bigger inventories, blockchain and domestic suppliers: how companies are re-jigging supply chains

The global supply chain snarls have companies reconsidering the just-in-time model. But the corporate rethink goes well beyond larger inventories.

As companies reckon with the supply chain havoc wreaked by the COVID-19 pandemic and natural disasters, almost everyone agrees: the way products and parts move across the world needs a serious rethink.

The past eighteen months, for example, appear to have curbed corporate enthusiasm for the just-in-time model of operating with lean inventories and requesting supplies only when needed.

“Old practices like just-in-time inventory that were really central to driving down working capital costs … are maybe no longer the best way to go,” says Vincent Dixon, a partner and supply chain expert at consultancy KPMG in Toronto.

For businesses, stocking up on material, parts or goods acts like insurance against supply chain disruptions, Dixon says. “You know it’s expensive, but when you need it, you’re lucky to have it.”

One way to deal with supply chain curveballs like the COVID-19 pandemic is to build “safety stocks” that ensure a store or factory has enough supplies even in the event of significant delays, he adds.

But beefing up inventories is hardly the only way in which companies are reevaluating the way they run their supply networks. The post-pandemic future of supply chains, it turns out, may involve both high- and low-tech solutions.

One Canadian tech company, for example, credits the blockchain for helping a key client keep the shelves stocked despite the global trade logjam. At the same time, one century-old Toronto business says it’s rediscovering the importance of domestic and U.S. suppliers.

In the widespread panic that seized retailers big and small in the run-up to the 2021 holiday shopping season, one company has been sounding remarkably relaxed: Walmart Canada.