While there is no silver bullet, there is a lot of tactical advice around that will increase the dependability and resilience of your supply chains.
Shortening lead times, removing steps in the chain, paying a premium for service to specification, creative logistic management, making information transparent, and many others.
All will deliver some benefit, and together can make a dramatic difference, but miss the essential nature of significantly improving supply chain performance.
When you ‘flip’ the chain, changing the drivers of the chain from supply to demand, the game changes.
Developing a clear view of demand, and responding only to the signals of demand, rather than the often functional signals coming from within the vertical management hierarchies of supply chain participants, alters the nature of the challenges being faced.
It becomes a demand chain, rather than a supply chain, or even a value chain.
In lean parlance, there is the concept of ‘Takt time’. This is a measure of the ‘pull’ put on a supply organisation by the demand from customers. It is the production time required to meet customer demand.
The so called ‘bullwhip effect’, the magnification of fluctuations in orders back through the supply chain will be at least mitigated by application of a metric that reflects real demand from the market.
Remember the panic buying of toilet paper, amongst other things, at the beginning of the pandemic? The underlying demand had not changed, we still all went to the loo at about the same rate. However, the sudden shortage on supermarket shelves created by panic buying resulted in supermarkets increasing their orders on suppliers, who in turn increased orders on their suppliers. At each point in the supply chain because of the uncertainty, everybody was increasing their orders, building inventory, magnifying the boom/bust cycle of supply, creating a ‘bullwhip’ effect. This is where the trajectory at the tip of the whip is progressively magnified by movement back through the length of the whip. Swung hard enough, it will ‘crack’ just like your supply chain.
The challenge is to match the whole supply chain to the real level of demand coming from the marketplace, demand uninfluenced by short term hiccups in the chain. If there is a silver bullet, that is it.
