4 Strategies to Manage Demand Volatility

In the last decade, the manufacturing industry has been dealing with the rising impact of demand volatility. As its name suggests, demand volatility is defined by a variation in demand for products that include rapidly changing and unpredictable demand. There are multiple reasons why demand is becoming more and more volatile. That is because customers’ expectations have changed. They now expect companies to provide a wider variety of products at low costs. And they want it now. 

In the last 16 months, the COVID-19 pandemic has highlighted the effects of uncontrollable world events on product demand. Some companies have struggled to meet the rapidly increasing demand, while others were left with excess inventory as demands for non-essential items plummeted. Companies that produce cleaning supplies and disinfectants labored under the strain of high demands. Now with schools re-opening in various parts of the country and the world, the demand is likely to keep increasing.

Situations like this remind us that manufacturing companies must be able to quickly adapt to the market’s demands. When the demand is not met, they risk losing their competitive advantage in the market and may see future sales dwindling. 

Strategies that can help manage demand volatility:

• What-If Scenarios:  Scenario planning in a What-If environment can be a good way to prepare for unknown situations. This allows you to test the effects of various changes to the production schedule without disrupting the current one. You can model how changes in inventory levels or in the production schedule will affect various KPIs and see how your company can swiftly adapt to changing conditions. 
• Forecasting:  Ideally, manufacturing companies should be able to accurately predict customer demand instead of scrambling to respond to it. However, accurate demand forecasting can be a challenge when dealing with volatile demands. One strategy would be to look at past demand and forecasts to determine your Forecast Accuracy and highlight whether you need to change your forecasting strategy.
• Adjusting the Planning Horizon:  Another method that can help manage volatile demands in the market in uncertain times is to adjust the span of your planning horizon. With many changes arising each day, it may be helpful to shorten the span of the planning horizon to be able to update your production more frequently. As such, you will be able to respond to those changes.
• Alerts:  High visibility in the supply chain is important. Planners and schedulers can set alerts to identify when inventory levels are getting too low to ensure that more of those items can be procured in time to meet demand.

PlanetTogether’s Advanced Planning and Scheduling (APS) Software is a tool that can benefit planners and schedulers in quickly adapting to their industry’s volatile demand environment. Meeting customer demand will ensure the well-being of the company and can increase sales while lowering costs and lead time to satisfy those demands.

With PlanetTogether APS, we can see if our paint department will be swamped next Tuesday and bring in more staff to meet the need.

DICK MARX, MATERIALS MANAGER, KNAPHEIDE TRUCK EQUIPMENT

Advanced Planning and Scheduling (APS) Software

Advanced Planning and Scheduling Softwares have become a must for modern-day manufacturing operations as customer demand for increased product assortment, fast delivery, and downward cost pressures become prevalent. These systems help planners save time while providing greater agility in updating ever-changing priorities, production schedules, and inventory plans. APS Systems can be quickly integrated with an ERP/MRP software to fill the gaps where these systems lack planning and scheduling flexibility, accuracy, and efficiency.

With APS you can:

• Create optimized schedules that balance production efficiency and delivery performance
• Maximize throughput on bottleneck resources to increase revenue
• Synchronize supply with demand to reduce inventories
• Provide company-wide visibility to resource capacity
• Enable scenario data-driven decision making

The implementation of an Advanced Planning and Scheduling (APS) Software will take your manufacturing operations to the next level of production efficiency by taking advantage of the operational data you already possess in your ERP system.