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Uncertainty Persists in the Supply Chain

Uncertainty Persists in the Supply Chain

February 1, 2011

MDM Associate Editor Jenel Stelton-Holtmeier recently wrote about how demand volatility has caused product shortages for some distributors. In an MDM survey, about half of respondents said they had seen difficulty in product availability in recent months.

The uncertainty in the supply chain she wrote about was also reflected in the results of a recent Tompkins Supply Chain Consortium survey, which found that supply chain leaders are more uncertain now than they were last year or the year before. Nearly two-thirds of respondents across industries predicted more future risk in the supply chain.

Eighty-three percent of respondents are experiencing at least moderate cost increases as a result of uncertainty; 69 percent show a higher than average increase in lead-time; and 62 percent see their speed to market either moderately reduced or greatly reduced. In general, 60 to 80 percent of companies responding indicate that there is a high to medium impact from a cost and time standpoint due to uncertainty.

The author of the report says that this uncertainty is challenging forecasting, budgeting, business planning and other processes dependent on historical information.

In the recent MDM article on product shortages, Jon Schreibfeder said that distributors and suppliers must look at demand planning differently. He said that forecasting methods that rely on history are no longer as effective as they used to be. Instead, distributors should shorten the time frame they use to create forecasts, pay attention to macroeconomic indicators, and train salespeople to gather the right information from current and potential customers.

Read the full MDM article: Channel Choke – Demand Spikes Create Product Shortages

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