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Ignoring recent demand signals in supply chain is the major cause of firefighting.
Supply chains get a continuous stream of fresh demand signals from the market. These come from various channels like GT, MT, D2C, e-Commerce, Quick Commerce platforms. Comprehensive set of demand signals usually comes once a day for the CPG companies.
These rich signals are, unfortunately, largely ignored in Forecast Driven Supply Chains. These systems continue to depend on their monthly forecast numbers for input materials delivery, production scheduling, and finished goods deployment. The result is a mismatch between actual demand and supplies at various nodes. Teams keep themselves busy in firefighting.
The solution to this persistent problem is actually quite easy. Stop ignoring the stream of demand signals. Leverage them instead. These signals give us early warning about demand shifts. We must act on them at the earliest.
If it means changes in finished goods deployment, let’s do it. If it means changes in production schedule, let’s embrace it. If it means changing vendor deliveries, let’s act on it.
The more we act on the current demand signals, the smoother the flow will be. And firefighting will disappear. Fill rates will improve. Freshness will improve. Inventory will go down.
That’s the essence of Demand Driven Supply Chains. Let’s embrace it and reap the benefits.