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How dynamic should the synchronisation be between demand and supply?
Supply Chains have always tried to match supplies with demand. The real issue has been the frequency of this synchronisation.
CPG companies have traditionally done it on a monthly basis, which resulted in significant stockouts and surplus as the actual demand came out to be quite different from the one considered in synchronisation.
We know that this synchronisation should be done more frequently. The higher the frequency, the better the results.
Some companies have started reviewing it on a weekly basis and seen the results improve. A few new-age companies selling through E-Com and Quick Commerce channels have started synchronising on a daily basis, resulting in significant reduction in stockouts and surplus.
What really is the obstacle in doing it more frequently?
The frequency limit is actually set by the fundamental supply chain capabilities of the company. How soon can they read the demand shifts? How soon can they translate it into revised supply plans? How soon can they execute these supply plans? Sensing, Flexibility and Responsiveness are the key limiting factors.
A few Quick Commerce platforms have moved to hourly synchronisation. Power producers do it continually.
Have you improved your frequency of synchronisation? Would love to hear from you…