Big variations in demand were a major problem for HP’s management.The common symptoms of such variations could be excessive inventory, poor product forecasts, insufficient or excessive capacities, poor customer service due to unavailable products or long backlogs, uncertain production planning (i.e., excessive revisions), and high costs for corrections, such as for expedited shipments and overtime.
Demand forecast updating bullwhip
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However, as they examined the distributors’ orders, the executives were surprised by the degree of variability.
When they looked at P&G’s orders of materials to their suppliers, such as 3M, they discovered that the swings were even greater.
Distorted information from one end of a supply chain to the other can lead to tremendous inefficiencies: excessive inventory investment, poor customer service, lost revenues, misguided capacity plans, ineffective transportation, and missed production schedules. Its sales at retail stores were fluctuating, but the variabilities were certainly not excessive.
Not long ago, logistics executives at Procter & Gamble (P&G) examined the order patterns for one of their best-selling products, Pampers.
glossary of transportation, logistics, supply chain, and international trade terms help.
A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z ABC Analysis: A classification of items in an inventory according to importance defined in terms of criteria such as sales volume and purchase volume.
The A group represents 10 to 20% by number of items, and 50 to 70% by projected dollar volume.