Inventory Management in 2023: Navigating the World’s New Norm

Over the past three years, manufacturers have endured abnormal worldwide conditions affecting their inventory control, from the pandemic to trade restrictions to geopolitical conflicts. And due to the strict compliance and regulatory measures, medical device manufacturers (MDMs) have quite possibly endured the most. How can the medical device manufacturing industry maintain a successful output of lifesaving goods during this new norm of disruption? Simply stated, every manufacturing industry can overcome many of these new challenges by upgrading or investing in a cloud-based ERP system as the first step to normalizing an abnormal situation. Let’s explore three of the most recent manufacturing challenges:

Challenge #1: Stockpiling and Stockouts
When the pandemic hit, just-in-time (JIT) inventory management flew out the window, forcing many medical device manufacturers to stockpile inventory and to scramble for alternative solutions during stockouts and supply interruptions. Unfortunately, supply shortages and bottlenecks from China and from other countries currently suffering under geopolitical conflicts have continued to disrupt supply chains worldwide. So how can manufacturers optimize inventory when nothing is behaving normally? Simply stated, they must automate and take advantage of every technological advancement available to them, from business collaboration and artificial intelligence to data-driven decision making. Having a modern ERP system to manage their inventory is the first step to minimizing the need to stockpile inventory. An ERP’s sophisticated algorithms and predictive analytics improve demand forecasting and planning capabilities, helping MDMs to better plan lead times, establish reorder points and manage safety stock levels. Because an ERP system automates the reordering process and enables supplier collaboration, it sends alerts when inventory levels reach specific points, prompting manufacturers to re-stock or to adjust production schedules to avoid stockouts.

Challenge #2: Supply Chain Disruptions
Because supply chains worldwide now are highly unpredictable, MDMs need ERP systems to help them build more resilient supply chains. Changes in tariffs, transportation, trade agreements and compliance standards have required MDMs to diversify suppliers, to implement reshoring or nearshoring strategies, and to localize manufacturing, and ERP systems facilitate these processes. Modern systems provide better communications tools, such as portals, to help you manage relationships with your suppliers and customers, thus streamlining the procurement process and ensuring timely delivery of inventory items.

Challenge #3: Communication Failures Across Your Supply Chain
Today, the number one office supply is still paper, and fun fact: over 1.2 billion dollars’ worth of post-its are sold every year. The number one form of business communication is email, and the number one reporting tool is a spreadsheet. Why mention those statistics? If you’re using outdated processes to track order change communication, whether they are Purchase Orders to suppliers or Sales Orders from your customers, chances are, you are drowning in post-its, paper copies of spreadsheets, and printed emails. It’s time to give up old-school tracking and communication, especially when research shows that 52% of orders will change at least once, many of them multiple times, and switch to more modern and innovative solutions, such as SourceDay’s PO Collaboration that automates and manages purchase orders with your suppliers, or Infor CloudSuite Industrial Customer Portal that allows your customers paperless management and real-time visibility into your supply chain. Modern solutions like these free you up from chasing everchanging customer/supplier demands, enabling you to better collaborate with everyone involved in your floor-to-door manufacturing process.

Overall, these three challenges often leave medical device manufacturing companies caught in the middle of their suppliers/vendors and their customers, and who wants to be in no man’s land? The best preemptive measure to avoid that undesirable landscape is to invest in a modern ERP solution, one that can house multiple solutions to your inventory management issues. They offer the necessary visibility, control, and data-driven insights to help manufacturers optimize inventory levels, ensure compliance, and respond effectively to market demands and challenges. And ultimately, they can help you to adjust to the new normal of doing business in an abnormal landscape.