Supply Chain Strategy: How to Meet Big Demand
Creating a product or service that is in high demand can be a company’s biggest opportunity and biggest challenge. It can be a dream or a nightmare depending on whether or not a supply chain strategy is in place to help manage and effectively forecast demand to inform the supply chain approach to meet customer experience expectations.
In today's world there is a lot of pressure on supply chains with little margins for error. The evolving consumer profile is one that is increasingly adapted to the expectation of instant gratification and convenience on every touch point. In this case, companies are forced to integrate digital implementation into their supply chain strategy to eliminate any potential pain points and deliver a seamless end to end transaction with their customers.
To meet a surge in demand, supply chains must be properly equipped to manage an influx in orders. There are many methods that are available for organizations to utilize to catapult them into the minds and hearts of their end users. This includes ways to meet demand and avoid inventory becoming stuck in the warehouse.
Here are some tips we put together to help companies manage demand spikes or hit during any time of the year.
1. Data Insights
Assuming a company has data on hand or uses a data analytics tool, organizations can predict demand by referring to past sales performances. The data from previous years can reveal product performance to inform the decision making process regarding the level of follow up orders and production. Companies should use this data to predict seasonal spikes in demand and customer behavior.
Similarly, based on product or service performance insight from years past, organizations can estimate their base load supply for manufacturing and predict necessary quantities.
2. Observe Than Act
Before fully committing stock, it's recommended that companies first observe and monitor the initial production batch and it’s off-take. The initial production could turn out different than predicted or preferred and only run to certain markets. Therefore, there is an opportunity to act based on the initial market insights to double down on where the product or service uptake is the strongest.
3. Omni-channel Fulfillment
In the event that sales exceed expectations, communication will be key. Its important that companies leverage their omni-channel model to reach their end users and offer them efficiency and transparency to improve their experience. We have seen some companies leverage their ecommerce feature to reduce time in the pipeline and fulfilling orders through a direct delivery channel.
4. Cut Pipeline Time
Multi-distribution channels demand shorter supply pipeline timelines. The reason being is to mitigate the risk of having excess stock taking up shelf space especially in the event that sales begin to fall. The idea is to monitor sales and have a responsive plan in place to have less inventory at risk for markdowns.
The ability to act and operate with efficiency in mind is largely dependent on a company's ability to predict changes in demand as early as possible. There will always be a delicate balance between flexibility planning and cost. Companies in the midst of their peak season or experiencing an unprecedented spike in demand must enable their supply chain strategy to be as responsive as possible in the face of volatile demand patterns.