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How active is your demand feedback loop?
All consumer companies have some sort of demand forecasting in place. They also track actual demand manifesting against this forecast, along with a feedback loop in place to compare the two.
How active should this feedback loop be?
Most companies have a passive feedback loop, where actual demand is used as a ‘lag indicator’ to assess the performance of various products in the market place. In such a design, we hardly use the rich potential of this data.
The other option is to develop an active fast feedback loop, which utilizes this rich demand data as a ‘lead indicator’ to predict how the near term demand is expected to be. This should be used to plan and execute supplies for a much more dynamic synchronisation of demand and supply.
Designing the supply chain with this active demand feedback loop does wonders in improving product availability as well as product freshness.