SUPPLY REQUIREMENT (KEY ISSUES IN SUPPLY CHAIN (CONFIGURATION OF…
:star:an occurrence detected by the supply chain where orders sent to the manufacturer and supplier create larger variance then the sales to the end customer :star:irregular orders in the lower part of the supply chain develop to be more distinct higher up in the supply chain :star:variance can interrupt the smoothness of the supply chain process as each link in the supply chain will over or underestimate the product demand resulting in exaggerated fluctuations
:explode:Disorganization between each supply chain link; with ordering larger or smaller amounts of a product than is needed due to an over or under reaction to the supply chain beforehand
:explode:Lack of communication between each link in the supply chain makes it difficult for processes to run smoothly. Managers can perceive a product demand quite differently within different links of the supply chain and therefore order different quantities
: :explode:Free return policies; customers may intentionally overstate demands due to shortages and then cancel when the supply becomes adequate again, without return forfeit retailers will continue to exaggerate their needs and cancel orders; resulting in excess material.
:explode:Order batching; companies may not immediately place an order with their supplier; often accumulating the demand first. Companies may order weekly or even monthly. This creates variability in the demand as there may for instance be a surge in demand at some stage followed by no demand after.
:explode:Price variations special discounts and other cost changes can upset regular buying patterns; buyers want to take advantage on discounts offered during a short time period, this can cause uneven production and distorted demand information.
:explode:Demand information relying on past demand information to estimate current demand information of a product does not take into account any fluctuations that may occur in demand over a period of time.