Supply Chain Management and the Global Recession; driver or barrier? Part 3 of 3

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Barriers or Drivers

It is important to remember that the goal of this article is to understand better all the factors related to SCM in order to keep the advantages of the positive concepts but also, to be aware of the dangerous practices.

Getting theory into practice

In order to take care of uncertainty, any strategy requires a choice to shape the future, such as R&D investing, adapt to the ongoing world or stay in the business without making a great commitment in the market. 

However, not all the companies have enough resources to invest. But there is always something to be done, like to take advantage from the social-networking technologies. This can help organizations to reduce costs and stay competitive during the upturn and identify future business opportunities.

How to estimate the demand forecast. 

It is true that predicting sales based on historical data is nothing new, but the central element of the global logistics system is the forecasting function in order to determine a central demand to specify which products go where and when. 

This is another reason to improve forecasting accuracy in upturn times. But with so many variables to consider, historical analysis alone is insufficient as a guide to the future. 

Order batching

The next factor to consider is order batching, due to customers tendency to order goods at certain times during a period, these periodic batching of processes result in surges in demand at certain points in time. However the demand will not always be the same.  The replenishment of inventory depends on the uncertainty of demand, as the level of safety stock is influenced by the variability of both demand and the lead time of supply.

Price fluctuation

Finally, the next concept is the price fluctuation. There is a list of prices that all of us most have to consider and analyze, such as: supplier’s prices, trade discounts, quantity discounts, transport charges, insurance fees, customs duty, non-returnable packages and returnable packages. This results in bigger variations in demand patterns in price fluctuations.

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