IPC International Community magazine an association member publication
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IPC COMMUNITY 84 FALL 2024 tious about overstocking, and inventory restock- ing was gradual and deliberate, aligning more closely with demand to create a responsive and flexible supply chain. The lean inventory strategies adopted post- 2008 had significant consequences during the COVID-19 pandemic. The JIT model, which minimizes on-hand inventory, left many manufac- turers vulnerable to the widespread disruptions caused by lockdowns, factory shutdowns, and transportation delays. As a result, industries like medical supplies, electronics, and automotive components faced severe shortages. Long global supply chains, especially for critical components, exacerbated the situation. With no buffer stock, many manufacturers were forced to halt produc- tion. In the initial aftermath of the pandemic, demand surged for certain products, such as home electronics and medical devices, while demand plummeted for others, such as automo- biles and fashion. This rapid shift created both overstocking and understocking across sec- tors. Uncertainty amplified demand forecasting errors, leading manufacturers to over-order to avoid shortages and exacerbating manufactur- ing bottlenecks. In response, manu- facturers once again re- evaluated their inven- tory strategies, shifting toward greater resil- ience by holding more safety stock and build- ing reserves of criti- cal components. The pandemic encouraged a move from JIT to just- in-case (JIC) inventory m a n a g e m e n t , m a i n - taining higher inven- tory levels to protect against future disrup- tions. Companies have been working to diver- sify their supplier bases, onshoring or near- shoring critical production, and investing in technologies like AI and digital twins to improve supply chain visibility and accuracy in demand forecasting. These measures enable manufac- turers to better monitor inventory levels and respond dynamically to changes in supply and demand. Manufacturers now aim to balance efficiency with resilience. Right now, at least, it appears manufacturers are unlikely to fully return to pre-pandemic inventory levels and are instead maintaining higher inventory levels to mitigate future risks. This approach has been especially pronounced for durable goods. For nondurable goods, the recovery was faster and smoother, with inven- tory-to-sales ratios returning to pre-pandemic norms due to simpler production processes and less volatility. However, for durable goods, inven- tory-to-sales ratios have remained elevated due to complex supply chains, demand volatility, and potentially a more conservative inventory management approach. Manufacturers of dura- ble goods, such as automobiles and electron- ics, appear to be maintaining higher stockpiles of critical materials to avoid future shortages.