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Deterministic planning in a stochastic demand-supply scenario?
Both demand as well as supplies are getting more and more uncertain. In such a scenario, why do companies continue to adopt deterministic planning?
Let’s come to the most likely reason. We like to impose certainty on uncertain scenarios, possibly due to our inability to deal with uncertainty... we just don’t know how to factor it in our plans. It is much easier to impose an illusion of certainty and make firm plans. When the uncertainty actually hits us and the plan doesn’t work, assign the underperformance to the market uncertainty!
Scenario planning is a step ahead, but not dynamic enough to take uncertainty head on when it arrives.
TOC has an elegant solution for such a situation… Create buffers to deal with uncertainty, and adjust these buffers dynamically as we come closer to reality. Proper buffer design and its dynamism can prevent both stockouts as well as surplus inventory in real life scenarios.
It is a vital element in Agile Supply Chains.