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‘What Got You Here Won’t Get You There’ in Supply Chain.
I am reminded of Marshall Goldsmith’s thought provoking book by the same title. We have seen it often in the domain of Supply Chain, where companies get complacent of their current policies and practices, which have delivered good results.
Many of these policies and practices were developed assuming the demand to be deterministic. The variability was assumed to be low, which could be buffered by the conventional safety stocks. These policies worked well in the past, making the teams vouch for them.
As the business landscape changes, demand gets more stochastic in nature, and disruptions are way too frequent, these earlier policies are unlikely to work in future. Stockouts will increase, so will surplus inventory in the system.
We need a Supply Chain model that is built for such a scenario. It has a demand sensing engine at the front-end to continually scan the market, decipher the evolving demand patterns, and make near-term predictions. It has the replenishment mechanism powered by dynamic inventory buffers, which are continually resized basis demand sensing.
In addition, companies need to build flexibility and responsiveness in their operations to meet the stochastic demand on time.
Are you ready?