Lecture 6

Demand Volatility: Essential Strategies for Dealing with Fluctuations

Supply chain demand fluctuations refers to the degree of instability or unpredictability experienced within the supply chain network.It is one of the significant causes of supply chain volatility in supply chain management. Fluctuations in customer demand can create ripple effects throughout the supply chain, impacting inventory metrics, production schedules, logistics, and overall supply chain performance.
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How to Implement JIT Inventory Management Without Chaos

When staying competitive is key to survival and growth in a fast-paced business environment, just-in-time (JIT) inventory management acts as a powerful strategy to optimize inventory levels and reduce costs.

Implementing JIT could however be a formidable task without a proper plan and execution strategy, but there are ways to successfully implement JIT inventory management and at the same time avoid chaos and ensure smooth operations.

Future-proofing the supply chain

Forward-thinking chief supply chain officers (CSCOs) now have a once-in-a-generation opportunity to future-proof their supply chains. And they can do that by recognizing the three new priorities alongside the function’s traditional objectives of cost/capital, quality, and service1 and redesigning their supply chains accordingly.The first of these new priorities, resilience, addresses the challenges that have made supply chain a widespread topic of conversation. The second, agility, will equip companies with the ability to meet rapidly evolving, and increasingly volatile, customer and consumer needs. The third, sustainability, recognizes the key role that supply chains will play in the transition to a clean and socially just economy (Exhibit 1).
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The 3 new rules of optimized warehouse management

It used to feel like warehouse management was a linear process, didn’t it? You ordered inventory. You stored inventory. And you shipped product based on orders. But then the events of the past few years changed everything. As a result, today the supply chain is under constant disruption. The empty shelves that started with the pandemic, and then the ongoing spotty availability of some products and brands, have resulted in lost market share for brands and frustrated consumers, forcing manufacturers to do things differently.

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Demand Driven Supply Chain 2.0

Picture the following scene: you’re outdoors and you hear thunder, and, looking up to the sky, you see a large, gray rain cloud. You take out your smartphone and find a website selling umbrellas. Having selected your style and color, you press ‘order’, and a mere 5 minutes later, a drone is hovering above you, gently delivering the purchase into your arms — just as the first raindrops begin to fall. .
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How to Achieve High Supply Chain Service Levels?

Determining how many points of sale and warehouses you should have to meet your delivery promise is crucial. More inventory points of sale bring you closer to the customer, reducing transportation costs. However, it also increases inventory levels and associated costs, including operating additional points of sale. The optimal approach involves designing a distribution network using mathematical algorithms to minimize these costs based on customer demand and the desired service level.

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