Email
sinha.rk.dr@gmail.com
Agile supply chains respect granularity
Agile supply chains focus on three fundamental capabilities of Demand Sensing, flexibility and responsiveness.
While implementing Demand Sensing, we must respect granularity. Sensing at an aggregate level looks easier, but its disaggregation to the granular nodes induces high level of errors. That’s because the same demand drivers have a differential impact at individual buffer nodes.
Take a consumer promotion, for example. If we have seen demand spike of 10% in past for a similar promotion, it’s quite likely that the blip was 30% in one geography and only 5% in another. That’s why Demand Sensing algorithms must learn at the granular level to predict the near term impact of these promotions in future.
Most companies apply a uniform expected spike of 10% for the next similar promotion. It will result in inadequate buffers in some territories and excess buffers in others, by design.
Demand Sensing works best when we apply it at the buffer level granularity.