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What lies at the root of frequent firefighting in Supply Chains?
Supply chain teams are often seen indulging in several firefighting efforts. Why is firefighting so common and what lies at its root?
One of the principal causes of firefighting is the latency in demand sensing, supply planning, and supply execution. Let me explain.
Consumer demand manifesting at the marketplace undergoes changes on a continuous basis. Supply chain professionals need to sense these changes in demand patterns. If we decipher it late, there will be a mismatch between supplies and demand. Demand sensing works best when done at the granular level on a daily basis. Weekly or monthly frequency for demand sensing is sure to lead to certain fires.
Having deciphered the changed demand pattern, we must plan the requisite corrective action to re-synchronise supplies with demand. If the supply planning is time consuming, we should expect some more fires.
The third latency is in executing the planned actions. For example, if the changed demand pattern warrants a change in production schedule and we take a week to execute it, there are bound to be more stockouts and inventory pileups.
Have you measured the three latencies – demand sensing, supply planning, supply execution – in your supply chain? Has it come down over time?
Best run companies, using DDSC methodology, have all three latencies adding up to less than 24 hours!