Dealing With Fluctuating Demand in Supply Chain

How to Respond to Demand Surges in the Supply Chain

demand surges in supply chain

As a business owner, you know that the demand for your products or services directly influences your supply chain. In most cases, high demand can ultimately equal more profit, but rapid increases in demand — or demand surges — aren’t always a good thing. In this context, a demand surge is the result of a large base of consumers panic buying materials or goods at the same time. Fluctuating demand, or massive surges in demand, can be the result of natural disasters or cultural events — such as the recent COVID-19 pandemic — and can cause supply chain disruptions. Whether it’s due to a new trend, seasonal shift, or an unpredictable event, there are a few ways businesses can respond to this increased or constantly shifting demand.

1. USE REAL-TIME DATA

Real-time data can be useful when preparing for or dealing with demand surges, especially ones that are easier to foresee, like seasonal shifts. Real-time data gives clear and immediate information about your customers’ current buying trends. Due to its timeliness, real-time data can help you stay on top of warehouse management, and prevent costly trend misinterpretations, like the bullwhip effect.

2. IDENTIFY AND UNDERSTAND CHALLENGES

Having a working knowledge of the market challenges your business faces is integral to withstanding — and, in some cases, predicting — fluctuating demand. Real-time data, historical consumer trends, and market stock trends can all help identify new challenges and inform new supply chain management strategies. Understanding your niche, from both a business owner’s and consumer’s perspective, can help you plan for your best business future.

3. AUTOMATE PROCESSES WHEN POSSIBLE

Business owners can experience a lot of benefits from automating traditionally manual services, particularly in supply chain management. The integration of automated services — especially in manufacturing — can save you both money and time. Automation allows you to focus on and optimize services that aren’t able to be automated, which is often where supply disruptions appear. It is important to note that initial integration may cause workflow disruptions as employees get used to new software, but this can be circumvented with training prior to integration.

4. FIND RELIABLE SUPPLIERS

Without reliable suppliers, no business can meet the needs of its consumers. Trusted and consistent suppliers are especially important during demand surges, as they will determine whether or not you are able to meet said demand. If the market or your consumer data is indicating a possible surge, it may be worth it to source a secondary, local supplier to cut down on waiting times for new shipments. This may be more expensive in the short term, but being able to match demand during a surge will help you retain business, which is the key to building profits in the long term.

5. INTEGRATE SALES AND OPERATIONS

As mentioned above, automating your business processes can be valuable for managing time during demand surges. Similarly, integrating inventory management software with other business operations — such as order management, sales, and shipping — can help optimize the efficiency of your supply chain, as well as manage demand surges when they occur. Mobile inventory management allows you to access all your crucial business operations from anywhere, which leaves you more equipped for potential crises.

6. IMPROVE DEMAND FORECASTING

In worst-case scenarios, demand surges are completely unpredictable and unprecedented. But in the best-case scenarios, demand forecasting can improve your ability to anticipate and respond to demand surges and fluctuations. Demand forecasting uses some of the metrics mentioned above — stock trends, real-time data, and market trends — as well as active analytics, such as surveys and market experiments, to make educated predictions about the future of customer demand. E-commerce businesses can also benefit from demand forecasting, using the data collected to optimize ad placements, or determine when to run sales or shipping deals. By using demand forecasting, you can consolidate information that is already crucial for your business operations into an actionable plan.

7. LOOK FOR WAYS TO INNOVATE

They say necessity is the mother of invention, and this is true for a business experiencing demand fluctuation. Being open to creative problem solving is one of your best tools to combat both demand surges and supply chain disruptions. These types of market crises force business owners to think on the fly, and by having your business operations organized and automated to the best of their ability, you can free up time to get creative. One creative fix can change not only your situation, but how you do business for the better.

Demand surges blur the line between exciting and impossible. Especially during times of increased societal stress, the consumer landscape can seem totally foreign, no matter how long you’ve been in business. But by staying organized, informed, and innovative, you can survive, and even thrive, during a demand surge.

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