I recently came across this article from Larry Lapide at MIT.  The basis of the article is discussing the need to balance demand and supply at all time intervals.

My experience has been that this is much easier for manufacturers to accomplish over the long-term than it is the short-term?  Why?  Volatility.  So many things are changing at once today that it makes it hard to maintain your balance (no pun intended).

The first challenge is supply chain visibility.  Most people struggle with this.  What is the actual state of demand - right now?  What is our current state of supply - at this moment?  Where do I have gaps and misalignments?

But visibility alone isn’t enough.  Once I’ve gotten a clear picture of things, I need to make sure everyone else has that same set of facts and that we’re armed with tools to develop a profitable response.  What happens if I change order priorities to meet the needs of a given, highly profitable customer?  What other options exist?  Which is the best option?

When things aren’t going according to plan, it becames a set of decisions that rely on human judgment.  In order to come up with the best action to take - the one that balances supply chain risk with rewards - these front-line decision makers need to have both visibility and tools to collaborate with their colleagues to come up with viable options, to analyze available options and to pick the one that appropriately balances all of the metrics critical to the company.  And all of this has to be done quickly, under intense pressures (especially as you near the end of the quarter).

This entry was posted on Tuesday, February 26th, 2008 at 10:12 am and is filed under Collaboration, Demand management, Risk management. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.