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How do we select the right demand signal for Supply Chain planning?
Effectiveness of Supply Chain planning depends significantly on the choice of demand signal. It should ideally capture consumer purchases, however, the information on actual consumer purchases is difficult to get in a country like India, with nearly 10 million retail outlets. Most companies have no option but to select another demand signal for planning.
What should be the characteristics of this demand signal? First and foremost, it should be as close to the consumers as possible in the distribution chain. It should capture consumer demand comprehensively at the most granular level possible. It should also capture demand shifts and evolving demand patterns at an early stage, which means that it should be available frequently.
The options are primary sales to distributors, distributor orders, secondary sales by distributors to retailers, retail orders, retail offtake.
Which one are you currently using? Is it channel specific? Can we move it closer to consumers?
These are the first questions to answer to make our Supply Chains more agile.