Team Five
Case II
Executive Summary
ABC Company is experiencing demand spikes during the last few days of each quarter. They seem to have no demand management team to take control of their supply chain. Sales teams push the product that they feel they need to sell without any concern or input from the production team. They also do not communicate with the supply management team to see if what they are selling is feasible and if they have the raw materials to produce more if the warehouse is emptied by these sales. By increasing communication between marketing and production ABC will be able to reduce the demand variability. ABC Company’s present condition is causing the unnecessary cost throughout the supply chain. The creation of a new matrix will give new insight into ABC’s current production dilemma.
The ABC Company must look at what is causing this demand volatility. It is clear that the demand volatility is being caused by the sales force offering incentives at the end of the quarter to increase the sales numbers. By recognizing the reason for the demand volatility steps can be taken to minimize demand volatility that is a result on internal reasons. By pushing sales at the end of the month with special promotions and pricing sales are peaking at the end of the quarter. This means the downstream member is buying enough goods to make it through to the next promotion at the end of the quarter. The cycle must be broken, and replaced with a system that does not encourage bulk buys at the end of the quarter. For this to occur there must be a normal quarter in order to obtain a forecast baseline. By “normal quarter” we are proposing a period without end of quarter incentives. There is absolutely no way to forecast demand while ...