What caused people to act the way they did in the eBeer?
- Lack of Communication
- Long Lead Time
Bullwhip Effect
Information going back through the supply chain is distorted and then amplified
Bullwhip Effect Formula
Variance in Orders / Variance in Demand
How does a long lead time affect decision making?
Panic - when inventory does not instantly arrive and solve your
growing backlog, you panic and order even more
What are the business implications of the supply chain structure?
- Stockouts
- Excess Inventory at times
- Layoffs / Re-hiring costs
- OT
- Expediting
How can we improve actual consumer demand?
- IT to not lump demand by lot sizes
How can we encourage communication/cooperation?
- Incentives to share info
- Vendor Managed Inventory
How can we improve forecasting?
- collaborative panning forecasting and replenishment (CPFR)
- eg. Barbie
CPFR - Canadian Tire
Now provides a 26 week planned order stream for each SKU
This helps suppliers see far in advance
when demand for an item will “pop”
How can we shorten ADMIN lead times?
IT
How can we shorten TRANSPORTATION lead times?
suppliers close by
How can we shorten PHYSICAL MANUFACTURING lead times?
- JIT
- small batches = faster production completion
Next-Shoring
local production NEXT TO demand
Systems Thinking
before you do anything, analyze how it will
impact your supply chain
What if you cannot change the supply chain
structure?
Adapt – recognize delays and predict ordering impacts
Examples of smoothing your supply chain
- EVERYDAY LOW PRICES instead of crazy sales that create waves of demand
