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Reduce the friction in Supply Chain replanning.
Supply chains in most companies suffer from the twin problems of stockouts and surplus inventory due to the inertia in replanning. Even if the teams know that the demand pattern has changed, they are unwilling to replan. How do we reduce the friction involved in replanning?
The first and foremost is to establish a Demand Sensing mechanism at the front end, which continuously tracks demand at the most granular level and deciphers any shift in the pattern. AI/ML based models are being effectively used for this purpose, reducing and sometimes eliminating the manual effort involved in the process.
The second step is to use the Demand Sensing output to resize the inventory buffers in the supply chain. It needs a heuristic which converts the demand signals to buffer sizing. Once this heuristic is developed, tested and validated, buffer resizing can also be done continuously without any manual effort involved.
The third step is to convert buffer penetration into supply signals, using replenishment principles of Demand Driven Supply Chain. This part is also automated and run daily or hourly.
Once the friction in replanning is reduced or eliminated, the teams need only an open mindset to move to continuous replanning, synchronize supplies with demand, improve flow, and minimize stockouts as well as surplus inventory.
The benefits are immense…