may not worry much when each individual factor’s variability is a standard deviation away from the average levels
you assumed when designing your supply chain. But if
demand is higher than normal, suppliers’ deliveries aren’t as
prompt as usual, and a critical production machine breaks
down at the same time, then problems emerge.
Supply chain design tools can help simulate, to an extent,
such variability in supply, production, and demand.
Although the tool does not provide the solution to those
problems, it enables managers to evaluate variability and
assess the performance of their supply chains under real-life, rather than average, conditions.
It’s also possible to assess the impact of solutions you
could adopt to better manage variability. Examples of these
solutions include postponement and late customization in
the DC and other “to-order” strategies. Vendor-managed
inventory or supplier-managed inventory can also be effective. Yet another option is to manufacture base products or
components that enjoy stable demand and then locally customize, to order, each variant that experiences more variable demand.
6Fear is in the air. Your company’s own practices and processes are in good shape, yet the CEO is nervous. What’s worrying him or her? The things the company can’t control, like supply chain disruptions that will
affect profits and investors’ earnings. When that’s the case,
it’s time for an assessment (or a reassessment) of potential
risks to your supply chain and perhaps a network revision
that will reduce the potential for disruption.
