By Nikhil Sonawane - June 20, 2022 3 mins read
Demand volatility can be a result of multiple factors. Businesses need to set up an efficient supply chain that does not get disrupted due to fluctuations in supply and demand.
Demand volatility is a situation that all businesses have to deal with; the challenge has grown due to the pandemic. It has impacted and changed regular business practices because enterprises had to quickly bridge the gap between customer demands and supply chain challenges.
Businesses that deal in procuring, manufacturing, and selling finished goods need to thoroughly strategize their supply chain and set up workflows to manage demand volatility efficiently. Such workflows will offer a competitive edge in the industry and track an accurate inventory to meet the client’s requirements.
An effective supply chain cycle with strategies to manage demand volatility is to consider all the possibilities by evaluating all the possible scenarios. It is a perfect way to analyze the influence of all the changes on production without hampering the existing one. Enterprises can draft a model on how evolution in the inventory or production life cycle will impact various business factors and strategize a plan to adapt to the changes seamlessly.
Manufacturing organizations should consider making accurate demand forecast instead of responding to the volatility later. It is a little complex task to make accurate predictions to manage volatile demands. Analyzing past demands and accurately forecasting future demand is essential. If the predictions are inaccurate, businesses need to look at different forecast techniques to make correct decisions.
Maintaining a safe inventory is a traditional way that allows businesses to manage fluctuations in supply and demand. But due to the warehouse costing, implications on businesses’ internal distribution, and an aim to have a lean supply chain, many businesses have stopped this approach. Implementing the latest relevant tech stack in the enterprise will allow organizations to accurately forecast and procure enough raw materials to maintain a buffer without hampering the current production flow. Maintaining safe Inventory will ensure that the businesses have sufficient inventory to overcome small demand volatility.
Maintaining connections with only a handful of suppliers can minimize the risk but, at the same time, can prove to be challenging and erupt crises like shortages and stock outs. Suppliers with limited production capacity or procuring sources will not have space to accommodate new production for high-demand products. At the same time, if businesses have a big network of suppliers, they can distribute the manufacturing across the vendors and suffice the increasing customer demand. Hence keeping a diversified supply chain will assist businesses to continue delivering during high demands.
Demand for a specific product might differ from location to location; businesses can distribute the inventory in multiple locations and evaluate the sales later. Distribution of the inventory will help push the products in slow-moving markets and redirect the same to a different location if the sales numbers drop. It is a perfect way to create demand where there is not, and if that does not work, it is easy to sell them in the market where the demand is high.
Nikhil S is a Tech Journalist with OnDot Media. He is a media professional with eclectic experience in communications for various technology media brands. He brings his eye for editorial detail and keen sense of language skills to every article he writes.
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