STUDENTS' CORNER - 129
Strategy 2 for effective supply chain
management: Dynamic demand-focused planning
As we said earlier, the executives must have a good efficient
understanding of the demand in the market. It implies that they should be aware
of the demand-related issues. Demand has potential risks and the executives
must be aware of the risks the products of his company are likely to face and fight.
Since demand and risk are closely linked with each other, let us spend
some time on the risk factor. Risk
essentially means an unpredictable future result; decision is taken in a way
with inadequate information since decision has to be taken and the result may
turn out to be profitable or its opposite. In fact, when attempting to arrive
at demand level for a product, the usual practice is to look into demand
forecast and very often, the demand forecast ends up fairly dependable. At
times, the forecast turns out rather unfair and incorrect. In such a situation,
there is a gap between the demand forecast and the actual demand and this gap
becomes the very source of risk related to demand.
The total experience of businesses knows all the falls and dangers
they have to tide over and many a time, business experience has real knowledge
to face such market shocks. It has
survived different risks such as excess demand, latent demand, and seasonal
demand, so on. Marketing experts have
generally knowledge and experience of dealing with such market variations.
Experience and unbiased analysis of the experience are the essentials of
expertise in any field. Therefore, the executives with live business insights
remain alert to the shifting of demand picture and plan accordingly in such a
way that they do manage to get things required for the business in time and in
the right quantity. They constantly fine-tune their operations according to the
needs of the market and this timely fine tuning is a good strategy for supply
Fine tuning does not mean it
is done at a regular interval; on the other hand, it must be almost every day
as a necessary commercial response to the changes in the market. Fine tuning
also involves changing production schedule without waiting for the month end.
Alertness to the changing faces of the volatile market knows no rest or
postponement of any critical decisions.
Critical decisions cover
changing supplier if he does not match with your agile operations so that you
do not suffer from supply short-fall. Of course, exploiting the technological
innovations need not be stressed because without technology orientation, no
business can afford to thrive.
Thus, dynamic planning based
on the demand and the market is another essential strategy in the management of
We will discuss another
strategy in our next session.