Where are the CP pain points today? What goes wrong, and why?
either outruns or fails to meet dynamic demand.
Long lead times and lack of visibility make it extremely difficult for many CP companies to respond appropriately to dynamic demand. This lack of demand visibility results in compromised ability to put the right product in the right quantity on the shelf to meet shopper needs.
Which is to say, inventory becomes the substitute for good information. Without good demand information, buffer stocks remain high because the risks of unacceptable service levels and store out-of-stocks are simply too great.
And short-term stop-gap measures are costly, leading to inefficient operations.
As the diagram illustrates, these problems of poor supply chain visibility and long lead times cause three primary problems common in CP companies lacking integrated supply and demand planning capabilities:
n Slow supply response
n Lack of demand visibility
n Escalating costs / inefficient operations
Further, lack of demand visibility leads to lost opportunity, particularly on promotional items. Lack of reliable information to properly direct supply planning also exacerbates the problem of customer service levels.
Particularly in today’s more extended global sourcing supply chains, without visibility supply response is inevitably slow. As a result, supply and demand often cannot be properly aligned — production
In short, lack of good information leads to operational inefficiencies across the supply network — CP companies cannot balance capacity and maximize throughput, can’t satisfy customer and consumer demand, and cannot manage their escalating costs. n
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