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Are companies missing a big Leverage Point in Supply Chain improvement?
TOC has a well-defined ‘5 Focusing Steps’ process for improving any complex system. It starts with identifying the system constraint. Does it lie in input materials, production capacity, cash, or market demand? Most leading consumer companies have solved the first three and they correctly identify ‘Market Demand’ as the system constraint.
As a logical next step, they start focusing on increasing the Market Demand through sharper positioning, better assortment and compelling propositions.
Are they missing a big intermediate step?
We should take a pause and check if the current planning and execution processes are able to meet the current demand or not. It’s not uncommon to see that about 10-15% of the current demand remains unserved due to supply-demand mismatch!
This is a big leverage point which often goes under the radar, while companies continue to spend time, effort and money solely on increasing consumer demand.
Are you focusing your efforts on improving the demand fulfilment process?