We are so caught up in our day-to-day lives, that we often forget how important the weather is both in our personal and professional lives. Think of all the times the weather was so bad that the roads were blocked and transit was indefinitely suspended.
What’s the impact of this type of weather on your business? Well, the answer lies in the type of supply chain you’re managing: either a traditional one or a demand-driven one. What does that have to do with anything? Well, the differences are tremendous and we will discuss them below:
Being demand-driven: what does it come down to?
When shifting from a traditional supply chain to a demand-driven one, you should know that the main shift occurs between the ‘build-to-forecast’ system and the ‘build-to-order’ one. This shift can actually be earth-shattering since it means that you need to be much more mindful of disruptions. In order to do this, you need to have access to real-time information from the supply chain, operating with maximum transparency.
When such weather occurs, there are some industries that are more at loss than others. And this is because they are reliant on top-notch, accessible infrastructure or simply because the weather directly impacts their production outcome, such as agriculture. Other affected industries are: distribution, retail, tourism and construction. The effects are disastrous in each of these industries: companies deal with dissatisfied customers, inventory shortages and lots of backorders.
Now we’d like to compare these two types of supply chains and see how each of them manages an unfortunate situation such as seriously bad weather:
The traditional supply chain
The most damaging thing that could happen to a traditional supply chain, when it comes to such unforeseen conditions, is a huge delay in the processes. And it makes sense for it to happen like this since there is no access to real-time information.
So if there has been such an incident, customers will continue to place orders – this way there will be an increasing pile of backorders. This is not only a momentarily hairy situation, but it can also cause problems in the long run: disproportionate inventory, because of which you may need to drop your prices sometime in the future.
Under the circumstances, the customers who cannot have their orders delivered as promised will probably cancel the orders leaving you with the same excessive inventory. Furthermore, their dissatisfaction will have a deep impact on your business, especially in these social-media oriented times.
Demand-driven supply chain
Cutting-edge B2B infrastructure can actually enable a demand-driven supply chain, by automating processes and giving every party in the supply chain real-time information for every order. When it is implemented properly, there will be no more communication issues and no more delays in decisioning.
Let’s continue with our imagined scenario: in such conditions, the demand-driven supply chain will more effectively manage the situation by rerouting as fast as possible or, if that is not possible, immediately sending updates to the demand side. The customers would thus have accurate expectations, eliminating the possibility of major dissatisfactions and thus of bad reviews, customers leaving elsewhere etc.
Nowadays, customers can actually decide the fate of a business. This is why it is essential to switch to a demand-driven supply chain – if you haven’t yet, it is not too late.
As you can see, proper B2B integration technology allows the synchronization necessary to react in a timely manner to unforeseen situations and to actually predict them.