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How stale is your demand data for Supply Chain planning and execution?
One of the important parameters often ignored by supply chain professionals is the latency of demand data, which is used for planning and execution of the supply chain. Teams tend to focus more on accuracy, comprehensiveness, and granularity of the demand data, rather than its latency.
When I speak to supply chain teams, they take pride in using the granular secondary sales data for demand planning, but fetch it only once in a month, to synchronize it with their monthly S&OP / IBP cycle. Demand data latency of a month is quite common across companies.
More progressive companies, using Demand Driven Supply Chain (DDSC) methodology, talk not in terms of months or weeks, but in days and hours. Retailers often talk in minutes!
CPG companies with access to actual retail orders, both from organized as well as small shops, often use the day’s demand data, process it in the night, and use it for next day’s scheduling of distribution, production, and purchase. Retailers do it multiple times a day to ensure that their retail shelves don’t run out of stock.
Do let me know if you would like to discuss a practical and easy methodology to put it into practice…