There’s a new “tool” that is burning up the internet called ChatGPT. You may have heard about it. It answers queries not in links, like Google, but in content, using artificial intelligence. Kids are using this to craft term papers, cheat on tests and generally, take the easy way out. The same can be said for business. For example, I asked ChatGPT to tell me what intermittent demand is and how to solve it. Here is the answer that was provided:
Intermittent demand refers to a pattern of demand for a product or service that is not continuous or consistent. It can be unpredictable and vary significantly over time, often with long periods of low demand followed by brief spikes of high demand.
In an intermittent supply chain, this pattern of demand can create challenges for managing inventory, forecasting and production planning. For example, a company with an intermittent demand may have difficulty accurately predicting how much of a product to produce and when leading to excess inventory or shortages.
There are several strategies that companies can use to manage intermittent demand in their supply chains:
Just-in-time Production
This involves producing and delivering products as close to the time of demand as possible, reducing the need for large amounts of inventory.
Safety Stock
This involves maintaining a buffer of inventory to cover unexpected spikes in demand.
Collaborative Planning, Forecasting and Replenishment (CPFR)
This involves closely coordinating with customers and suppliers to improve demand forecasting and inventory management.
Advanced Planning and Scheduling (APS) Systems
These systems use algorithms and machine learning to analyze data on demand, production and inventory levels to optimize production and supply chain operations.
Customer Segmentation
Companies can segment their customer base into different groups based on their demand patterns and tailor their production and inventory management strategies accordingly.
Flexible Manufacturing
Companies can adopt manufacturing processes that allow them to quickly and easily scale production up or down in response to changing demand.
Network Design
Companies can optimize their supply chain network to reduce the impact of intermittent demand by locating production and inventory closer to customers, using multiple sources of supply, or implementing cross-docking and other strategies.
Overall, managing intermittent demand requires a combination of these strategies and a willingness to be flexible and adapt to changing demand patterns in real-time.
Cool.
Now let’s consider the usefulness of the answer that was generated by ChatGPT. Like an Excel spreadsheet, ChatGPT provides basic, factual information. But does it provide an actionable answer? Can you take the findings of this “research” to the corner office and secure a budget for investment that will make tangible improvements to the supply chain? Of course, the answer is no. The information received was descriptive without an ounce of meaning or relation to the business challenges being faced. The solutions provided only describe aspects of the solution and not their impact.
It’s easy to look at a supply chain and plan for items with predictability. It’s easy to flag those items with unpredictable demand. Understanding how to handle these items requires advanced tools and professional experience. For example, I once worked with an HVAC company that had a 24-hour SLA on availability for parts going back 20 years. This resulted in a large amount of safety stock sitting in distribution centers weighing down on cash flow. After making an investment in technology, they had the capability to assess the trade-offs between stock and service. Ultimately, they identified a pool of items that they would always keep on hand to meet service levels while still reducing overall inventory. Conversely, there were some items where it was more cost-effective to risk service levels and not fully stock.
In a recent blog and webinar series, Arkieva took a deep dive into how best to calculate safety stock and plan for future demand. Although safety stock is in the title, these blogs are really about demand. How to sense it, act on it and build from it. There’s a lot more information contained in this series than what a generic chatbot can scrape from hundreds of articles.
With deep roots in supply chain consulting, Arkieva has a team dedicated to helping you address your specific needs. We can help best understand how to optimize your inventory, make a business case for investment or enhance what you do with Excel. Talk to us.
