A effect bullwhip with no apparent cause.
The bullwhip effect: supply chain practitioners know this phenomenon well – a slight change in demand downstream can create large fluctuations upstream, and conversely small delays upstream can create a catastrophe for downstream partners in the chain. In many cases, we are subjected to these shocks without understanding their origins.
This creates distortions and tensions along the supply chain, leading to shortages, overstocking and emergencies – a lot of stress on the path to customer satisfaction.
If you’re not a supply chain practitioner, you may have experienced the same effect… on the road. Have you ever been stuck in one of those severe slow-downs on the freeway, with no identifiable cause?
The experiment in the video below on a circular road shows how such “phantom” traffic jams appear. It’s only natural… but noxious
Adaptive cruise control
In 2017, MIT repeated the same experiment, but inserted a single car equipped with adaptive cruise control – the grey SUV in the video below. It turned out that inserting this single buffer into the system dampened the wave to the point that the traffic jam effectively disappeared.
Just a moment. What does this have to do with Demand Driven practices?
An adaptive Demand Driven cruise control
The stockbuffers , time and capacity implemented in a Demand Driven operating model behave like an adaptive cruise control: when the buffer is too empty or too full, measures are taken continuous to adjust the pace upstream.
Buffers don’t have to be placed everywhere – they can simply be inserted at certain key stages of the flow to dampen variability.
A supply chain, or simply a factory, needs regularity to be efficient and productive. If everyone is constantly running in all directions to respond to the latest emergency, you may be the car constantly trying to change lanes to gain a few meters in the traffic jam, to no avail.
If you set up mechanisms that resemble an adaptive cruise controlin your supply chain , you’ll be able to adapt continuously to changing demand, without any bumps in the road. Your supply chain might look something like this (with or without a gray SUV…):
This cadences the entire flow according to actual demand and to the constraints of your system, integrating the right safety margins to avoid collisions.
As a result, the drivers (your planners) are much less stressed.
Note: if you don’t understand the diagram above, don’t worry, contact us and we’ll explain…
Traditional planning fails to continuously adapt
In the conventional planning logic , you will make forecasts, you will try to bring stability through a master production schedule fixed over several weeks, and you will calculate upstream requirements thanks to an MRP calculation based on lead times and bills of materials.
In other words, you define the route you’re going to take on the road: what is going to be the demand (the speed in front of you), how fast you’re going to drive from kilometer 26 to kilometer 70, exactly what time you’re going to arrive at the tollbooth at the finish and at your intermediate stops – you will determine all this two weeks ahead of time, because your MPS is frozen for two weeks. What are your chances of this happening?
Make your supply chain adaptive with intuiflow
If you have adaptive cruise control, your tactics for adapting to the market will be undoubtedly smoother
You’ll use your forecasts to make sure you don’t leave at the worst possible time (neither too early nor too late), you’ll determine your arrival time with your navigation app, you’ll add a bit of security to cope with the unexpected, and you’ll take to the road serenely by adapting your speed to the flow ahead…
In fact, you’ve already mastered these techniques for your personal travel, you just need to transcribe them into your supply chain flow management practices with Intuiflow…
