Inventory Management & Supply Chain Responsiveness

Introduction – Identify – Adapt – Scale

Inventory Management has always played a key part in any successful Supply Chain. Correctly managing inventory levels helps companies to swiftly adapt to unpredictable changes within the marketplace. Volatile demand can cause troubling issues when not handled correctly. These issues can often perpetuate themselves into a strong negative cycle. For instance, let’s say you are a company that sells seasonal jackets. Due to an unusually warm winter, your winter jackets no longer sell as expected. Without adapting to the current demand, your winter jackets will become excess inventory overtime. Storing these jackets/tending to them and selling excess inventory etc., all take time and resources. In addition, the warmer winter raises the sales on your fall jacket collection. As you haven’t updated the inventory on these jackets, you are a significant amount of revenue. These negative effects could have been prevented with an adaptive and responsive Supply Chain. It is crucial for all businesses looking to scale, to understand the importance of having the ability to shift production towards demand.

Correctly managing inventory levels requires a responsive Supply Chain, but what exactly does that mean? According to IGI Global(n.d.), A responsive Supply Chain can be defined as a Supply Chain that is able to shift its production to unpredictable customer demand. How do Supply Chains do this? One way to realize a responsive Supply Chain is to correctly manage inventory levels.

Inventory Management

Correctly Managing Inventory levels can be a struggle, depending on the marketplace and products in question. See below the best ways you can effectively improve your inventory Management by making your Supply Chain more responsive.

Improve Supplier relationships

Products that require multiple raw materials or parts from different Suppliers are heavily reliant on the active Supplier relationships. Companies that trade in those products ought to continuously look for ways to improve their Supplier relationships. This can be done through ways such as specialized contracting/transparency improvements/on-site visits etc. These are all ways to improve the Supplier relationships so that the flow of required parts/raw materials can be done as fluently as possible. Having a better understanding of your supplier’s business position (and vice versa) allows a company to better anticipate and forecast required elements for their end products. This maximizes the throughput speed at which new materials can be ordered and received, in turn increasing your adaptability to the marketplace.

Figure 1(Supplier Relationship Management) Significance of Healthy Supplier Relationship. (n.d.). from

Risk Management

Another way to improve inventory control and build Supply Chain responsiveness is through effective risk management. Especially in turbulent times and strong unforeseen events such as COVID-19, the element of risk management is crucial for any business not looking to fall into a spiral of negative effects. Supply Chains are able to manage risks by having multiple production facilities/acquiring different logistical partners/correctly managing their staff/capacity levels, etc. It is important to always look for ways to minimize risks. This will minimize the negative effects incurred when facing unforeseen events. As a result, less pressure will be put on your business which gives breathing room for improvement and correction. Especially for SME’s (Small-Medium-Enterprises) looking to invest in new technology, a detailed risk analogy of the sought-after investment must always be made prior to continuing business. Automation and digitalization are important elements in Supply Chains nowadays. Despite the importance of these elements, never invest without a proper risk-return analysis. Investments made correctly with low risks (e.g., Material Resource Planning IT systems) allow companies to increase the improvement of their inventory management.


A method to the improvement of Supply Chain performance and inventory management that has become increasingly popular over the years is the concept of Outsourcing. Companies such as ModusLink are Supply Chain experts with years of accumulated Industry knowledge. Companies within the Supply Chain Outsourcing industry often have big teams of professional Supply Chain Experts that allow them to often effectively take over whole Supply Chains. Some companies can also be price-competitive, increasing the attractiveness of outsourcing your Supply Chain. These companies use their extensive network, Supplier relationships and vast IT-infrastructure to massively increase the Supply Chain responsiveness and Inventory Management. Companies that outsource effectively gain the ability to spend resources elsewhere. This allows their business to flourish in a short-time period and more importantly, increase their ability to scale effectively.

These three elements are important ways to Increase a Supply Chain’s responsiveness and in turn, increase inventory management. There are plenty of other ways a business can improve its Supply Chain Strategy. Would you like to know more about these innovative strategies and how you are able to implement these within your Supply Chain? Stay tuned for our next Blog or talk to a ModusLink Expert today by clicking here!.


Amsler, S., O’Donnell, J., & Cole, B. (2021, February 11). inventory management. SearchERP. Retrieved November 24, 2021, from

Significance of Healthy Supplier Relationship. (n.d.). Strategic Sourcing. Retrieved December 3, 2021, from

Walts, A. (2021, October 29). Your Essential Guide to Effective Inventory Management + 18 Techniques You Need to Know. The BigCommerce Blog. Retrieved November 21, 2021, from

What is Responsive Supply Chain | IGI Global. (n.d.). IGI. Retrieved December 3, 2021, from