Supply chain fill rate issues linked to decision-making, not inventory levels

Supply Chain Dive reported that many manufacturing operations are experiencing record inventory levels and stretched working capital, yet their supply chain fill rates remain stuck in the low 90s. Despite ample stock, orders are delayed or backordered, prompting financial concerns about service performance.

The outlet explained that the root cause is not supply shortages or forecasting errors but rather the decision-making layer of the supply chain. Decisions about order prioritization, plant sourcing, customer protection, and supplier engagement are made locally and quickly, often without visibility of the entire network.

This local optimization leads to inventory being in the wrong place, committed to incorrect orders, or held against inappropriate risks. As a result, the fill rate suffers even though stock is available somewhere in the system.

Manufacturers face a tension between carrying high working capital in inventory and achieving better fill rates. Increasing stock levels may seem safer but can lead to bloated balance sheets without improving order fulfillment.

Supply Chain Dive suggests that improving fill rates requires better decision-making frameworks that consider the whole network rather than relying solely on forecasts or adding safety stock.