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Latency in Supply Chain has a multiplier impact.
Supply Chains typically have three types of latencies.
First is the Demand Latency, wherein we take cognisance of the latest demand pattern changes only with a lag. This is typical in a monthly S&OP process.
Second is the Planning Latency, which is the time delay between acknowledging latest demand patterns and building it into revised supply plans. Companies often take a week or so to update their supply plans.
Third is the Execution Latency, which is the time lapse between revised plans and actual execution. It could be due to frozen schedules, batching, and rigidity in scheduling.
Supply Chain leaders often assume that the impact of these latencies is additive in nature. The reality is much harsher. The impact in certain cases can even be multiplicative!
Supply Chain improvement projects must build in an initiative to minimize these three latencies.