Handling demand variability and uncertainty in the planning process involves several strategies and techniques:
1.Data Analysis: Analyze historical sales data to identify patterns. Understanding past demand variability helps in developing more accurate forecasts and planning inventory levels accordingly.
2.Forecasting Methods: Use advanced forecasting methods such as time series analysis, regression analysis, and machine learning algorithms to predict future demand. These methods can capture and account for demand variability and uncertainty more effectively than traditional forecasting techniques.
3.Scenario Planning: Develop multiple scenarios based on different assumptions and factors that may impact demand, such as economic conditions, competitor actions, and consumer behavior. By considering various scenarios, planners can better prepare for different outcomes and adjust their plans accordingly.
4.Safety Stock: Maintain safety stock levels to buffer against demand variability and uncertainty. Safety stock acts as a cushion to prevent stockouts during periods of unexpectedly high demand or supply disruptions. The level of safety stock should be determined based on factors like lead time, demand variability, and service level targets.
5.Collaboration with Planners & Suppliers: Collaborate closely with suppliers to improve responsiveness and flexibility in the supply chain. Also, establishing strong visibility amongst the planners will help in better planning as they are the best persons who can sense the demand and alter forecasts accordingly.