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Is your supply chain stressed during new product introductions?
New product introductions are tricky for supply chain planning. Even agile supply chains often lose out on product availability and freshness. How should we design our supply chain for smooth introduction of new products?
New products are characterized by very low level of demand predictability. It is quite common to find that actual demand manifesting in the market is vastly different from the market research predictions. Moreover, the emerging patterns seem to be different in each distributor territory. Sounds familiar?
For succeeding in such a volatile and unpredictable demand scenario, supply chains need to be designed for three specific capabilities. The first and foremost is the dynamic demand sensing and short-term demand prediction capability at the most granular level. If we don’t develop this capability, we would be just guessing the market and our guesses would mostly go wrong.
The second capability is to make the entire supply chain demand-driven, based on TOC replenishment principles. This would ensure that supplies are matched to emerging demand on an ongoing basis.
The third capability is to make the backend logistics, production, and procurement flexible and responsive so that we capture all the emerging demand.
Once we develop these three capabilities, new products would flow smoothly with high levels of availability and freshness.