Today officially sees the end of summer and all the demands on the summer period. The rush for getaway escapes, ice creams, beer gardens and BBQ food moves on to a new season. All organisations will know they go through periods where demand is crazy busy and other periods of thumb twiddling.
For an organisation’s operations to run effectively and efficiently and produce products which meet their customer’s requirements on time and without delays, it is imperative that they balance supply and demand.
Here are Nine Feet Tall’s 9 tips to managing supply and demand:
1 – Think in terms of supply and demand – this might be an obvious thing to say in an article about supply and demand but the fact that an organisation is based on supply and demand isn’t necessarily always that obvious. This thinking must be built into the culture of the organisation.
2 – Understand what influences your demand – by understanding what factors are going to increase or decrease your demand levels, you will be able to plan your operations. Whatever your product or service, a lot of organisations will have one or more ‘peak periods’ throughout the year.
3 – Look to forecast your demand levels – use your understanding of what influences demand and past data to forecast future demand levels. This can be done in the long term (1 year/several months), then refined in the medium term (across a couple of months) and confirmed in the short terms (a few weeks).
4 – Understand your capacity levels – understanding your demand does not mean that you can meet it. You need to understand how much you can actually produce and whether your supply can meet the demand. Analytics and data is playing an increasingly important role helping organisations to understand capacity levels both now and into the future.
5 – Create a plan to overcome gaps between supply and demand – once you understand the demand and the supply levels you can identify any gaps which need to be addressed. The next step would be to come up with options to close these gaps. For example, the Passport Office once paid staff overtime in an attempt to keep up with demand. Resourcing is usually the solution and many organisations will use temps or short term contractors to ensure demand is met in peak times before returning to normal once peak demand has been met.
6 – Refine the plan over the long, medium and short term – as mentioned organisations should first look at the long term horizon to understand when gaps between demand and supply might occur. They can then look to address these gaps in the medium term allowing them to have the ability to meet demand in the short term.
7 – Implement the plan – having a plan and implementing a plan are very different things. Organisations must have the flexibility to implement a plan quickly enough so as to not interrupt operations or service level agreements. For example, this could involve employing and training additional staff in a short time frame – an organisation needs to ensure bureaucracy is kept to a minimum and on boarding and training is efficient and effective to get people up-to-speed.
8 – Have a strategy for clearing a back log – sometimes even with the best planning and control a backlog does occur. Therefore organisations should have a plan to deal with it before it occurs. This could involve targeting the processing of particular high value products or customers, or merely operating on a reverse chronological basis.
9 – Be ready to react – even with a solid grasp on planning and control an organisation will always face some uncertainty. It is important to have the right controls in place which allow you react quickly to a change in demand.
We all know the quote about failing to plan, make sure that you have a strategy and the right systems in place to manage and control your supply and demand. For more information contact: EstherM@NineFeetTall.com