With the rising cost of living and inflation impacting consumers and businesses, the economy is experiencing a global shakedown. Consumers have been tightening their purses on food, rent and even gas prices. In January of this year, Australia’s inflation rate had risen to 7.8 per cent, the highest since 1990, affecting many Australian businesses including the supply chain industry.
The demand of goods and services are shrinking, and the cost of transportation and shipping are rising. Inflation continues to be a major cause for concern for businesses globally and these disruptions have impacted supply chains on all fronts from labour shortages to inventory scarcity. This has proven to be a trying time and hence, it is paramount supply chains focus on demand planning and forecasting to build its resiliency and agility.
Undertaking probabilistic planning
By undertaking probabilistic planning, supply chains are able to efficiently make decisions during periods of uncertainty. Probabilistic planning enables supply chains to analyse multiple demand variables to identify the probabilities of a range of possible outcomes. It provides supply chain leaders with rich information to identify risks and opportunities at all levels, enabling supply chain leaders to make an informed decision. During periods of uncertainty, probabilistic planning should be employed to allow supply chain leaders buffer time to deal with any disruptions at any stage of the supply chain. It aids supply chains to perform better and make optimal decisions timely.
Probabilistic planning should not be misunderstood for accuracy. Instead, it should be understood as a foundational building block for domains that contain uncertainty, especially with today’s economy.
Demand planning is one of the many strategies supply chains utilise to predict the demand of goods and ensure it is delivered on time to customers’ satisfaction. The main goal of this is to ensure supply chains have sufficient inventory levels without having an overstock.
This will require supply chains to buckle down and carefully assemble data.
To ensure demand planning is effective, supply chains will need to sift through high volumes of data to determine the best possible strategy and execution plan. There are various tools available today for demand planning, however supply chains must ensure it selects the appropriate tool that is based on its unique needs to provide robust results.
Demand planning is the future for supply chains, enabling it to forecast the appropriate amount of stock. With machine learning capabilities, demand planning aids supply chains to receive precise, real-time inventory updates and forecasts.
Collaboration is key
Supply chains understand that one of the most pivotal strategies to ensure its success is by leveraging its partners. For example, demand planning tends to get complicated as there are different layers to it which takes time and resources to get through it all. With partners, supply chains can engage in knowledge sharing which becomes an invaluable asset that will aid supply chains to get through the process swiftly.
On top of this, information sharing can help supply chains make optimal decisions quicker. The nature of this industry requires quick turnaround time and with partners, supply chains can make better decisions backed up by data to support its plan.
It is important for supply chains to ensure they are collaborating with the right partners and partners who are committed for the long-term. When supply chains collaborate for the long-term, it highlights that all parties involved are committed to making change and are therefore able to dedicate time and resources to achieve the best possible outcome. It also allows partners to fill in the gaps and enable the supply chain to enhance its performance.
Supply chains with long-term partners have witnessed the highest impact and reduced overall costs.
Resilience and agility as the foundation
Resilience and agility are key for supply chains especially today. It is about embedding resilience in the foundation of all supply chain operations. In doing so, it ensures all systems, processes and communications are aligned accordingly to the supply chains’ goals. When these processes are aligned, it makes communication from top down easier as every level of the supply chain have the same focus and no goals are lost in translation. Supply chains will then operate as a united hub with each part executing its role.
In tandem, agility is another focus supply chains need to work towards. By being agile, supply chains develop the ability to quickly adjust its strategy in procurement, inventory management and delivery to meet the rapid changes the supply chain industry undergoes.
To ensure this, supply chains will need to break down the traditional barriers and focus on optimising end-to-end processes which helps to speed up the process from months to weeks. This is the level of agility supply chains need to attain to remain competitive today.
In these trying moments, supply chains will need to invest and plan strategically to come out on top. This is not an easy task, but with the appropriate strategies, technologies and partners, supply chains can enhance its performance and deliver customer satisfaction. Probabilistic planning and demand planning are essential tools that supply chains need to readily invest in to witness returns. Collaboration is paramount for information exchange and filling in the gaps, and most importantly, embedding resilience and agility will help set supply chains apart from its competitors and ensure its continued growth.