Stabilizing Demand

In addition to focusing on customers and products that fit your supply chain, you can also shape demand by stabilizing it. As described in Chapter 2, variability is one of the most costly problems in supply chains, particularly when it amplifies as it flows up the chain. Anything you can do to stabilize the flow of demand across the chain will improve your performance and give you a substantial advantage over chains that have to cope with higher levels of variability.

The biggest source of variability in supply chains is a phenomenon called demand lumping, in which a steady flow of demand is divided up into arbitrary chunks that appear as sudden surges in demand. In Figure 13.8, a retailer sells products at a constant daily ...

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