2020 marked a year of unparalleled supply chain chaos largely due to the COVID-19 pandemic. However, disruptions still persist and, worryingly, many companies seem to be easing their focus on supply chain resilience, say partner Knut Alicke and coauthors. For example, in the latest McKinsey Global Supply Chain Leader Survey, while 47 percent of respondents plan to maintain current inventory levels, 46 percent anticipate decreasing or nixing risk buffers, with inventories dropping to or below prepandemic levels. Only 7 percent intend to up network inventory.
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An area graph shows the inventory management approach used by survey respondents in 2022, 2023, and 2024, and their plans for the next 3 years. In 2022, 18% of respondents decreased inventory levels below pre-COVID-19 targets. This number is expected to increase to 25% in the next 3 years after 2024. The percentage of respondents that revert to lower inventory with no risk buffer grew from ~9% in 2022 to ~20% in the next 3 years after 2024. The respondents who would keep inventory levels constant shows a decreasing trend, from 13% in 2022 to ~46% in the “next 3 years” after 2024. The percentage of respondents who increased inventory with risk buffers also showed a decreasing trend, dropping from 60% in 2022 to ~9% over the next 3 years after 2024. Source: McKinsey Global Supply Chain Leader Survey, April 26–June 10, 2024 (n = 88).
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To read the article, see “Supply chains: Still vulnerable,” October 14, 2024.