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sinha.rk.dr@gmail.com
Demand Sensing – the missing piece in TOC distribution?
TOC distribution solution has replenishment as its core operating mechanism with inventory buffers placed strategically in the distribution network. The heart of the solution lies in dynamic resizing of these buffers.
The buffers are expected to represent ‘Maximum demand during replenishment lead time, adjusted for supply reliability’. Can we compute it without taking a view on the demand during RLT? Current practice is to size these buffers based on just the past demand, as captured in the patterns of buffer penetration.
Demand Sensing now makes it possible to take a considered view of the expected demand during RLT, incorporating the impact of various demand drivers coming in play during RLT. Once we start tracking prediction errors, we can convert expected demand to maximum demand to protect against the impact of prediction errors.
We have tweaked the TOC distribution solution with this simple addition of demand sensing and the results have been outstanding.
If you wish to know more about it, let’s discuss.