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Predict, Not Just Respond

Supply Chain Planning-A Lesson from Covid-19

Predictive Supply Chain

If there is one lesson to be learnt for supply chain planning in this Covid-19 chaos, it is to be predictive not just responsive. When you are responding your choices are very limited and you may not have the time to respond and make the right changes even if you knew what to do. Being Predictive does not imply telling the future but it does mean mitigating risk by smarter planning. The more predictive the supply chain is the less responsive it needs to be. Remember the “revolutionary” concepts of Just-In-Time and Zero Inventory. In a world that nothing changes, they are perfect, but we are far from that. Even under “normal” circumstances we need to allow for variability. It is not (inventory) cost vs. service level, it is about the right mix of both capacity and material to keep in the entire supply chain. This includes capacity at the contract manufacturers and other alternative methods of making goods. So how much extra capacity and material is enough? That depends on weak points of your supply chain which includes supplier lead-times, alternative suppliers, max demand variability and past data. By combining these factors, one can deploy algorithmic methods to define safety levels  throughout the entire supply chain at minimum cost. For more information about these techniques go to Adexa/Risk.

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Comments (1)

The supply chain is really important to keep the business running in these times. When it comes to supply chain management one needs to be proactive rather than reactive. It is really important to make sure to plan a proper system for the supply chain management. I found your article really informative. I will definitely share this article with my peers. Thank you for sharing this article.

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