Contribution by Vijay Baweja – Senior Supply Chain Consultant at Bristlecone
Organizations across industries want to enhance their demand and supply planning processes to achieve better customer satisfaction. Traditionally, supply chains have always struggled with the need to match demand and supply. As the businesses are growing and supply chains becoming global, the pace of demand growth has outpaced growth of supply. In such situations, where supply is limited, what options would a company have to match demand and supply?
Organizations may increase capacity, add more people, add a shift, buy a new machine, etc. Such options may serve well in the long term, but in the short term they tend to be slow and costly, as they require senior management authorization and upfront investments. Apart from this, the demand may not increase as anticipated, leading to negative returns on investments. Then what is the alternative? How can organizations work better in situations of overloaded supply resources without too much investment?
One way to achieve the same would be to identify and work with demand priorities. Once visibility is gained over different types of demands, it will be easier to allocate resources and budgets. This will also help drive customer service levels. Almost all of the SCM enterprise applications in the market today provide the feature of demand prioritization. These tools act as a solver to generate a supply plan based on various demand types likes sales orders, stock transfer, reservations, etc. And their associated priority based on business policies and decisions.
Organizations can determine the criteria to be used for sorting of the demand and also of the sequence in which to cover these demands. Using these priorities, organizations can generate proposals for capacity and production planning. At the same time, it would be highly important to maintain a demand repository where an organization can consolidate and store all different types of demands for better reporting and exception alerts. This will help organizations quickly respond to changing market conditions. Another important aspect here would be to capture the complete audit trail of a demand element, which will help in reduction of replenishment delays and improved resource utilization for future demand.
Thus without heavy investments, demand prioritization can help solve some of the supply issues along with providing better customer service and visibility into inventory. This approach puts customer at the centre of the business processes and connects internal and external resources to meet the demand and running operations profitably.