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How dynamic are your inventory norms?
We discussed in the previous post that dynamic inventory norms are at the heart of an effective replenishment system. How does it help in making the supply chain more agile?
Let’s see how our body manages agility. We know that our heartbeat responds to the energy requirements of our body. If we run faster, the heart beats faster. When we slow down and walk, the heart beats slower. This mechanism ensures that the blood pumped to our limbs is in line with their energy requirements.
Imagine if the heart were slow to respond… it caught up with the changing energy requirements after a couple of minutes!
This analogy helps in designing Agile Supply Chains. If the demand spikes for whatever reason, internal or external, how fast should the inventory norms adjust themselves? Within 24 hours? A week? A month? Or continue to be based on the original monthly forecast?
Agile Supply Chains minimize this time lag. FMCG companies now work with a day’s lag. Quick Commerce companies adjust their norms in a few hours.
How agile is your supply chain?
You now know the direction of solution to make it more agile…