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What is holding companies back in improving their Supply Chain agility?
Leading companies are convinced that their supply chains need a much higher level of agility. However, there seems to be some obstacle coming in their way, which prevents them from taking the first step. What could it be?
My discussion with various supply chain leaders indicates that there are quite a few. I will try to cover them here in a series of posts. Here is the first one.
The most common and perhaps the biggest obstacle is lack of a good market demand signal. ‘We don’t have consumer offtake data, other than from a few Modern Trade or Quick Commerce retailers’. The concern looks genuine at first glance. If we don’t have access to timely and comprehensive market demand data, how can we sense demand?
We know that consumer offtake is the most pristine demand signal. It gets distorted as we move away from the consumer to retailer, distributor and company warehouse.
Should we give up Demand Sensing if we don’t have the most pristine demand signal? Of course not. Most FMCG companies do have access to a slightly distorted demand signal in terms of retail orders. Why not use it as a demand signal? It’s better than not sensing at all.
Some industries like pharmaceuticals don’t have access to even retail orders or distributor sales. They can still use their primary sales as a demand signal, which I admit is a bit more distorted.
The important point is to identify the best demand signal in your context and use it for Demand Sensing. If you pull other levers like granularity, frequency of refresh, and impact of demand drivers, Demand Sensing will still add a lot of value in improving the agility of your supply chain.