Article in Response to Lora Cecere’s article “The COVID-19 Supply Chain Recovery”
The resuscitation of our global supply chain will most certainly be a daunting task. The RSI team wholeheartedly agrees with Lora that an effective recovery will require companies to potentially redesign their network and perform simulations of the supply chain to understand impacts. RSI can help with this daunting uphill task with our “what-if” simulation capabilities. Let’s dig a little deeper into how RSI can help with the two examples provided by Lora.
- Toilet Paper: in this example, the supply chain is stressed by a sudden uptick in demand resulting in what Lora accurately refers to as The Bullwhip Effect. She states: “Under normal circumstances, the order replenishment for toilet paper is ten to twenty days. The United States retail shelves are not empty because manufacturers do not have inventory. Brand owners sit on seventeen days of inventory in their warehouses. The issue? The brand owners are just not getting the replenishment signal from retailers on a timely basis.” “When the demand for toilet paper increased in the recent days, manufacturers could not see it because they were tethered to an order not a shelf signal.”
- Luxury Goods (handbags, prom gowns and dress shoes): in this example, the supply chain is stressed by a sudden decline in demand; thus, resulting in excess stock or as Lora states: “goods that will never be sold because the order signal is out-of-step with the markets.”
Right Sized Inventory’s “What-If” Simulation
RSI’s “what-if” simulation capabilities enables businesses to model and understand the impact of dramatic changes in their supply chain such as the toilet paper and luxury goods examples, as well as many other scenarios. The “what-if” functionality allows our clients to adjust key supply chain input parameters (e.g. Lead Time, Lead Time Variation, Target Service Level, Forecast Trend, Probability of Order Cancellation, Fixed Reorder Interval, Minimum Order Quantity, Order Multiple, Replenishment Method, and Management of Large and Unnatural Spikes in Demand) to run multiple simulation scenarios; thus, identifying the optimal model prior to actual adoption in their supply chain environment.
All supply chain professionals have experienced the situation where you believe changing a couple specific inventory parameters will optimize your environment, only to find out the changes did not have the impact you desired. Or, even worse, perhaps they created the opposite effect of what was desired! The problem in a “live” environment is you must make changes and wait a substantial amount of time for the results given real-world adoption time. With RSI’s “what-if” capabilities you can simulate those changes and understand the impact within minutes! Work smarter not harder by simulating the impact of changes to your supply-chain with RSI!
We understand the stress supply chain professionals are under right now; however, if you feel this capability would be helpful for your organization, please reach out to us.
Click here to see a one minute video on RSI’s “what if” functionality: https://www.rightsizedinventory.com/what-if-simulation/
Original articles written by Lora Cecere for Forbes: https://www.forbes.com/sites/loracecere/2020/03/17/planning-for-the-cov-19-supply-chain-recovery/#534312dd3550
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