Supply chain management is a way to manage all resources in a way to win over all other competition. Well designed supply chain for different products will look different, it vary from product to product and demand to demand. While preparing Supply Chain Planning, factors to be considered like nature of the product, customer expectation, production method, resource utilization, required labor and few others as well depend upon nature of the business. While analyzing all this factors focus remain on timely delivery and availability of the resources that required during production.
Demand and supply side uncertainty are the key determining factor when designing a supply chain for a product. Well designed supply chain that suits the management is always going to be a competitive advantage.
Functional products or aesthetic products have always difference in demand
Product nature can be broadly classified as either functional or aesthetic. Functional products like pasta or bread have stable demand whereas demand for aesthetic products like fashion goods or jewelry is erratic. Innovative aesthetic products enjoy high profit margins but at the same time have seasonal demand and short products life cycle. It is difficult to stock enough of each item from broader product portfolio but a stock out of a popular item can tarnish brand reputation. On the other hand functional products like pasta or bread have predictable demand. Product nature determines demand uncertainty which in turn determines the nature of the supply chain. While product nature lends demand uncertainty, supply side uncertainty can emanate from multiple factors. Uncertainty at the production stage can originate from unpredictable yield or change in production technology or change in process, so one must keep non-production factors in mind as well that contribute to supply side uncertainty.
We all know that demand is unpredictable for functional as well as for aesthetic products, Demand for items such as fashion apparel, and books known only when the product reaches the store shelf but products like apparel and hi-tech gadgets rarely face ant supply side uncertainty. In past HP, a leading consumer electronics manufacturer tackled the problem of uncertain demand for its high end printers. Tackling any situation is possible but we are required to prepare for it we need to have alternate plan that we can opt from phase of the process. Demand planning & forecasting can reduce uncertainty and once it implemented effectively, it will show immediate and significant difference in business performance. In Short we can say that supply chain and demand planning to parallel to each other.