How much inventory is enough? That's a question many are asking (once again) in the wake of Katrina and Rita.

There was a time when more than enough inventory was considered an asset. Safety stock ruled.

Then less became much better. Materials handling advancements made companies more efficient. Meanwhile, automatic data capture and software tracked inventory, eliminating large quantities of it.

But that doesn't mean there's less inventory to handle today. Quite the opposite. According to our economist, Dr. James Haughey (DCs to see growth spurt), inventory volume has risen 21% since 1999. However, the inventory-to-sales ratio has dropped significantly. Ten years ago, it was 1.47, and will finish out this year at about 1.3.

So while there's much more inventory in the supply chain, we are operating at quite lean levels given the balance of supply and demand and our abilities to manage it. Then Katrina and Rita created a great imbalance.

Earlier this year, Steve Sensing of third-party logistics provider Ryder had this to say. "The way we break it down is there needs to be two to six weeks of inventory across the entire supply chain. The higher range is for product being made in Asia, and the lower range is for product from the U.S. and Mexico."

That's a good start, but I have a sense it only tells part of the story going forward.

The other day, Dr. James Tompkins of Tompkins Associates made a great observation. "Contingency planning is no longer just contingency planning. Instead, contingency planning is part of your strategy."

And that has a great ring of truth. Based on what happened with Katrina and Rita, it seems only natural to elevate contingency planning. As our lead news story (Supply chain strategies for weathering storms) says, being prepared can go a long way toward coping with such events.

The last time contingency planning was elevated to this level was immediately following 9-11, when people felt most vulnerable. Then we settled back into more traditional concerns. It's time to break out of that, and move contingency planning into your supply chain strategy. And from that, appropriate inventory levels will most likely become apparent. That's the true impact of Katrina and Rita.