Growing up, how many times did a parent ask you, “Who is staying for dinner?” A basic example of demand planning. Synchronize inventory with demand. When that doesn’t happen, you are much more likely to have a supply chain disruption. In my ‘dinner-as-a-kid’ explanation, that would be like not having enough pizza. Another example of course from a Retailer’s use case list is an out-stock.
If there’s a deficit, schedule material and people to make more. If there’s surplus: stop, or slow manufacturing, etc. but have a process, a tool that helps you align, and monitor that number with your trading partner.
I recently read an article in the New Yorker, covering some of the current supply chain issues. There have been quite a few of them in the news lately. This article helps illustrate the complexity of the supply chain. It also covers some of the disruption types dealt with in different industries. The point is, with so many layers of complexity and risk, having a solution seems critical. Visibility to the item level, and collaborative planning capabilities are also essential.
Buyers and sellers need to be able to look up/downstream (respectively) and be able to discuss requirements to meet customer demand while minimizing excess inventory and avoiding any supply chain disruptions. Cross-functional teams of people from each company support the effort. Teams need inventory visibility, and be able to engage in collaborative processes to help manage changes of all types. It’s not surprising companies are moving to improve Demand Planning, CPFR, and S&OP projects.
Demand planning provides multiples of benefits that translate well for companies. For example, successfully anticipating, and planning demand can be a competitive advantage. It also enables a company to cope with change more effectively. Improved demand forecasting to bring greater efficiency (Profit) to operations should be included. Demand management can earn revenue by enabling companies to be proactive in managing their market.
Collaborative strategies help companies efficiently align with trading partners, and that close relationship helps you both: hit more on-time delivery of wanted goods at a lower cost, as well as helping the manufacturer to schedule people, and equipment more effectively. Considering labor and capacity shortages is something we are dealing with currently, that seems timely. While it won’t prevent out-stocks in all cases, forewarned is forearmed when it comes to working to stop supply chain disruptions.
If you are interested in supply chain strategy, here is an except of a blog post from our partner Neogrid, on the topic.
Read it here on Neogrid.
# Supply Chain Disruption
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