An inventory management model based on the “just needed”: the example of Hutchinson company during the COVID-19

Abstract

In several economic sectors, the COVID-19 has impacted the organisation of supply chain. Companies had to face a dramatic decrease in their order books. Traditional sales forecasting methods were unable to anticipate this abrupt interruption in the delivery of finished products. The production schedule initially planned was revised downwards and the raw materials ordered, according to an MRP-type calculation, were not consumed. The increase in raw material stocks, due to its importance on the companies' cash flow, became a strategic and priority issue. It was in this context that the aeronautical group Hutchinson set up an inventory segmentation based on an indicator: the just needed. Our article describes this method, known internally as Stock Segmentation Raw Material (SSRM), and assesses its advantages and limitations.