Managing Supply and Demand in a Volatile Environment

It’s difficult not to focus on the here and now, particularly when disruptions to supply chains show little signs of abating. But now, more than ever, is the time to be forward looking.

It’s generally accepted that Just in Time is no longer fit for purpose. The days of being able to rely on 30 days port to port are gone and extended supply chains are here to stay, at least for the foreseeable future. So if you know it’s now taking 45 days, what do you do? Build this into your supply chain, pay to hold more stock so you can keep selling to maintain customers, or take the risk?

What the smart, forward looking companies are doing is planning to mitigate risks. But effective planning needs to be based on data, knowledge and insight. It’s easy to look at a queue of ships outside a port and assume that’s where the problem is, however the situation that caused this hold-up is likely to have taken place further up or down the supply chain.

Having visibility of what’s happening across the supply chain is imperative for building a resilient supply chain. It enables organisations to be more responsive to sudden shocks, spotting potential issues before they come about, having options at the ready. However, many organisations don’t have a full picture of their end-to-end supply chain and if you don’t know where your stock is, what’s happening at the ports and when it’s going to arrive, how can you make informed decisions?

But that knowledge exists in the supply chain. It’s likely that someone, somewhere will have had access to this many weeks beforehand. So now’s the time to be asking how you can get visibility of this data and insight and be well-positioned to avoid the bullwhip effect.

This phenomenon – when a small shock at one end produces massive shocks further up or down the supply chain – can be reduced or at best prevented through effective use of data and technology. Although typically discussed in terms of consumers triggering the shocks, we now operate in a world where both supply and demand shocks are causing shocks through supply chains.

Over the past 18 months, we’ve seen how this powerful combination of data and technology, expertise and relationships has helped inform and expedite critical decisions. Having a supply chain control tower that enables an organisation to have a full overview of POs, inbound inventories, port congestion and other data points has helped us spot deviations upstream, identify disruptions and potential issues, for example lead times that are too short. It’s helped our customers get on the front foot and together we’ve resolved critical issues including finding different routes to market.

Supply chain logistics may be in the headlines today but it hasn’t always received the focus or investment particularly in inbound supply chain those of us working in the industry know it needs. Now with freight rates 7 x times what they once were it’s getting attention. The big question is, will this be maintained – will we see investment in upstream knowledge, control and management become the new norm?

Perhaps these latest supply chain shocks will be the ones that trigger a sustained change in how organisations see value in having visibility of their supply chains, driving interconnectivity and a preparedness to invest time and resource in planning.

Time will tell who’s successfully navigated the current choppy waters, but there will always be sudden shocks. We may not know when and where these will happen but when they do hit, will you be prepared to ride out the next one?

Click for more information on Ligentix supply chain management software.