Supply chain uncertainty makes inventory planning harder because manufacturers must balance unpredictable demand, changing supplier lead times, material shortages and rising costs.

The best approach is not simply to hold more stock.

Manufacturers can plan inventory more effectively by using demand forecasting, dynamic safety stock, lead-time visibility and multi-level BOM forecasting to identify what inventory they will need, when they will need it and where additional protection is justified.

Key Takeaways

• Don't respond to supply chain uncertainty by simply holding more inventory. The goal is to hold the right inventory in the right quantities and at the right time.

• Use demand forecasting to create a forward-looking inventory plan. Historical demand alone may not reflect changing customer demand or increasing volatility.

• Account for changing supplier lead times. Longer or less reliable lead times can materially change how much safety stock a manufacturer needs.

• Use dynamic safety stock instead of blanket inventory buffers. Critical, volatile or long-lead-time items may require more protection, while stable items may require less.

• Forecast at both finished-goods and component level. Finished-goods demand should flow through the bill of materials to reveal future component and raw-material requirements.

• Identify inventory gaps before they become production shortages. Earlier visibility gives manufacturers more time to expedite orders, find alternative suppliers, adjust production or increase safety stock.

• Make inventory planning continuous rather than static. As demand, inventory and supply conditions change, the forecast and replenishment plan should change with them.

• Use technology to support (not replace) planner judgement. Inventory forecasting software provides a consistent, data-driven basis for deciding what to buy, when to buy it and where additional inventory protection is needed.

The fundamental shift is from reactive to proactive inventory planning: manufacturers cannot eliminate supply chain uncertainty, but they can use forecasting to quantify its impact, identify where they are most exposed and act before uncertainty becomes a shortage.

Why is inventory planning harder for manufacturers today?

For manufacturers, supply chain disruption has fundamentally changed the question:

How much inventory should we hold?

When supplier lead times were stable, suppliers were reliable and customer demand followed reasonably predictable patterns, inventory planning could often be managed with relatively straightforward rules. A planner could look at historical demand, calculate safety stock and place orders accordingly.

Those assumptions become much harder to rely on when conditions keep changing.

Shipping delays, geopolitical tensions, supplier constraints, rising costs and changing customer demand can all affect how much inventory a manufacturer needs to hold.

This results in a difficult balancing act of:

• Hold too little inventory and risk production stoppages.

• Hold too much inventory and tie up working capital.

• Carry excessive safety stock and increase exposure to obsolescence.

• Order too late and leave insufficient time to respond to long supplier lead times.

Recent research from The Manufacturer illustrates the scale of the challenge. Its June 2026 survey of more than 230 senior UK manufacturing leaders found that many manufacturers are holding up to a month's worth of stock simply to keep production moving.

Additional inventory can provide resilience, but it also increases costs and puts pressure on margins.

The problem, therefore, is not simply that manufacturers need more inventory.

They need greater confidence that the inventory they are buying is the inventory they actually need.

What are the best ways for manufacturers to plan inventory during supply chain uncertainty?

Manufacturers can improve inventory planning in uncertain conditions by moving from static, spreadsheet-based planning towards a continuously updated, data-driven process.

A practical inventory planning process should:

• Forecast future demand using historical sales and changing demand patterns.

• Account for current inventory and inventory on order.

• Factor in supplier lead times and demand variability.

• Calculate appropriate safety stock rather than applying blanket buffers.

• Translate finished-goods demand into component and raw-material requirements.

• Identify future inventory gaps before they become shortages.

• Update purchasing recommendations when demand or supply conditions change.

In other words:

Historical demand → Demand forecast → Inventory requirements → Replenishment recommendations

For manufacturers, there is another critical layer:

Finished-goods demand → Component requirements → Raw-material requirements

This is where dedicated inventory forecasting software can make a significant difference.

1. Use demand forecasting instead of relying solely on historical averages

One of the biggest weaknesses of traditional inventory planning is assuming that the future will resemble the past.

A manufacturer may have historically sold an average of 500 units per month.

But what happens when demand starts varying?

Or when demand becomes significantly more volatile?

A static spreadsheet may continue using the historical average until someone manually changes the assumption.

Modern inventory forecasting software can instead automatically analyse historical demand and identify changing patterns to produce a forward-looking forecast.

The objective is not to predict the future perfectly but to create a repeatable forecast that can be updated as new information becomes available.

Manufacturers need a forecast that helps them understand what is currently most likely to happen and how that changes their inventory requirements.

2. Adjust inventory planning for changing supplier lead times

Demand is only one side of the inventory equation.

Supplier lead times also determine how much inventory a manufacturer needs to carry.

Consider a manufacturer whose key supplier normally has a six-week lead time.

If that lead time increases to ten weeks, the business may need enough stock to cover the additional time before replenishment arrives.

A static inventory policy created months earlier may no longer be appropriate.

This is why manufacturers should regularly review:

• Supplier lead times

• Lead-time variability

• Minimum order quantities

• Supplier reliability

• Current inventory

• Inventory on order

• Expected demand during the replenishment period

The longer and less predictable the lead time, the more important it becomes to identify potential inventory gaps early.

3. Use dynamic safety stock instead of adding a blanket inventory buffer

When supply chains become uncertain, one of the most intuitive responses is to hold more inventory.

However, applying this approach across the entire inventory portfolio can become extremely expensive.

Not every SKU requires the same level of protection.

For example, a critical component with highly variable demand and a long supplier lead time may justify a significant safety stock buffer.

Another component with stable demand, short lead times and multiple suppliers may require considerably less.

A more effective approach is to make safety stock responsive to the characteristics and risk of each item.

Shifting the question from:

“How much extra inventory should we carry?”

to:

“Where do we actually need additional protection?”

is a much more sustainable approach to supply chain resilience.

4. Forecast inventory at both the finished-goods and component level

This is particularly important for manufacturers because inventory demand does not exist at just one level.

A customer order for a finished product can create demand for:

• Components
• Subassemblies
• Packaging
• Raw materials
• Intermediate goods

For example, if forecast demand for a finished product increases by 20%, the manufacturer needs to understand the corresponding impact on every material required to produce that product.

This is where bill of materials (BOM) forecasting comes in handy.

A manufacturing-focused forecasting system should be able to take the forecast for finished goods and translate it into the underlying component and material requirements.

Finished-goods forecast → BOM explosion → Component demand → Raw-material requirements

Without this connection, planners may know that they need to produce more finished goods without having a clear picture of the additional materials required to manufacture them.

That creates a dangerous lag between demand becoming visible and component shortages becoming visible.

With multi-level BOM forecasting, manufacturers can forecast requirements through multiple levels of the product structure, helping them identify future component and raw-material requirements before shortages occur.

This is particularly valuable when a single component is shared across multiple finished products.

A change in demand for several finished goods can create a much larger change in demand for a common component.

5. Identify inventory gaps before they become production problems

The value of forecasting is not simply knowing what demand might look like.

It is understanding when current inventory is no longer sufficient to support that demand.

Consider a manufacturer with a ten-week supplier lead time.

If a potential shortage becomes visible when only two weeks of inventory remain, there may be very few options.

But if the same inventory gap becomes visible eight weeks earlier, the manufacturer has significantly more time to respond.

The business may be able to:

• Bring an order forward
• Increase an order quantity
• Find an alternative supplier
• Substitute a component
• Adjust production schedules
• Prioritise higher-value customer orders
• Temporarily increase safety stock
• Negotiate different delivery arrangements

Forecasting therefore creates something extremely valuable during a disruption: time.

It gives manufacturers more time to respond to it.

6. Move from reactive inventory planning to proactive inventory planning

The difference between reactive and proactive inventory planning can be illustrated simply.

Reactive inventory planning

Demand changes → Inventory falls → Shortage becomes visible → Planner reacts → Emergency order

Proactive inventory planning

Demand changes → Forecast updates → Future inventory gap becomes visible → Replenishment recommendation → Action before the shortage

Earlier visibility gives planners more options to make appropriate changes.

That is especially important when suppliers have long or unreliable lead times.

7. Use a consistent, data-driven basis for inventory decisions

In uncertain conditions, inventory decisions can easily become dependent on individual experience.

A planner might say:

“I think we should order another 500.”

Another might say:

“We normally keep three months of this component.”

Sales might expect demand to increase.

Procurement might want to buy extra because a supplier has recently been late.

All of these inputs may be relevant.

But when thousands of inventory decisions are being made simultaneously, relying primarily on individual judgement can create inconsistent decisions and compound small errors into significant amounts of excess or insufficient inventory.

A forecasting system provides a common data-driven basis for those decisions.

Planners can consider:

• Historical demand

• Forecast demand

• Current inventory

• Inventory on order

• Supplier lead times

• Safety stock requirements

• Demand variability

• Replenishment requirements

• Component relationships

While the decision still lies on the planner, the technology gives the planner a clearer picture of what the data suggests.

8. Recalculate the plan when conditions change

One of the most important capabilities in an uncertain supply chain is the ability to update the inventory plan.

A forecast created three months ago may no longer reflect today's reality.

Demand may have changed.

Supplier lead times may have changed.

Customer orders may have changed.

Inventory positions may have changed.

Component availability may have changed.

Therefore, manufacturers should treat inventory planning as a continuous process rather than a one-time calculation.

A modern forecasting system continually incorporates the latest available inventory and demand information into forward-looking planning.

How inventory forecasting software helps manufacturers manage uncertainty

An inventory forecasting software gives manufacturers a consistent planning model that can change when reality changes.

A typical forecasting workflow looks like:

Demand data → Forecast → Inventory position → Safety stock → Lead-time requirements → BOM requirements → Replenishment recommendations

For manufacturers, this can create a much more connected view of inventory.

Instead of separately managing finished goods, components and raw materials, planners can understand how changes in finished-goods demand affect the materials needed to produce them.

For example:

Higher finished-goods demand → Higher component requirements → Higher raw-material requirements → Earlier replenishment requirement

This provides earlier visibility into potential shortages and allows manufacturers to respond before those shortages disrupt production.

For SMB manufacturers, tools such as StockTrim are designed around this type of inventory forecasting workflow, including forecasting across multi-level bills of materials so finished-goods demand can be translated into underlying component requirements.

This gives planners better information, earlier visibility and a more consistent basis for making inventory decisions.

Frequently Asked Questions

How can manufacturers reduce inventory risk during supply chain disruptions?

Manufacturers can reduce inventory risk by improving demand forecasting, adjusting safety stock to actual demand and supply conditions, monitoring supplier lead times, and forecasting component requirements from finished-goods demand. The goal is to protect critical inventory without increasing stock levels across the entire portfolio.

Should manufacturers hold more inventory during supply chain uncertainty?

Not necessarily. Holding additional inventory can improve resilience, but holding too much creates higher working-capital, storage and obsolescence costs. A better approach is to identify which SKUs and components are most exposed and allocate additional safety stock where it provides the most protection.

How does demand forecasting help manufacturers manage supply chain uncertainty?

Demand forecasting helps manufacturers estimate future inventory requirements rather than relying only on historical averages or current stock levels. When demand patterns change, updated forecasts can provide earlier visibility of future inventory gaps and allow planners to adjust replenishment decisions.

What is BOM forecasting and why does it matter for manufacturers?

BOM forecasting translates finished-goods demand into the components, subassemblies and raw materials required to manufacture those products. It matters because a change in demand for a finished product can create corresponding demand for multiple underlying materials.

How can manufacturers forecast raw-material requirements?

Manufacturers can forecast raw-material requirements by taking the expected demand for finished goods and flowing that demand through the bill of materials. A multi-level BOM forecasting system can connect finished-goods forecasts with the component and raw-material requirements needed to support future production.

How can manufacturers avoid stock-outs without holding excessive inventory?

Manufacturers can reduce stock-outs without excessive inventory by improving demand forecasting, accounting for supplier lead times, using dynamic safety stock and identifying future inventory gaps before they become shortages. This allows additional inventory to be targeted at products and components where it is most needed.

Can inventory forecasting eliminate supply chain uncertainty?

No. Forecasting cannot predict every disruption or eliminate uncertainty. Its value is in helping manufacturers quantify changing inventory requirements, identify potential gaps earlier and make more informed decisions as conditions change.

What is the difference between reactive and proactive inventory planning?

Reactive inventory planning responds after inventory has already fallen or a shortage has become visible. Proactive inventory planning uses forecasts and inventory data to identify future gaps early enough for the manufacturer to take action before production is affected.

The future of manufacturing inventory planning is not perfect prediction

Manufacturers will continue to face changing demand, uncertain supplier lead times, material constraints and unexpected disruptions.

Therefore, manufacturers need an inventory planning process that can adapt as the future becomes clearer.

They will be the ones that can answer, quickly and confidently:

What are we likely to need?

When will we need it?

How much do we need to order?

Which components and materials are most exposed?

Where should we hold additional safety stock?

And perhaps most importantly:

What has changed since we made our last plan?

Modern inventory forecasting makes uncertainty easier to quantify, monitor and act on.

For manufacturers operating under constant supply chain pressure, that can be the difference between reacting to shortages and planning ahead of them.

About StockTrim

StockTrim is the leading cloud-based inventory forecasting tool purpose-built for SMB manufacturers. Since 2017, we've analysed tens of thousands of real SMB inventory datasets to deliver practical, data-driven forecasts and inventory recommendations that manufacturing businesses can confidently act on.

Connect your inventory data in minutes and see how better forecasting can reduce stock-outs, excess inventory, and manual planning for your business with our 14-day free trial.