Supply is always going to be more than demand and meeting that supply will be difficult.
By Procyon Mukherjee
April 03, 2017
This is the basic problem of any supply and demand planning: You have to produce what is needed at the exact time it is needed. To do that, you must make the best possible decisions at the last possible moment. If you make the decision too early in the production cycle, you clog your pipeline with the product. Everything is delayed.
This in itself is a planning puzzle: When do you initiate the production process?
To answer this, think about the entire supply chain. Take bauxite, for example. From bauxite, you produce alumina. Processing alumina gives you aluminum, which gives you all kinds of downstream products.
But it could very well be that the bauxite comes from Australia, the alumina is produced in the United States, it is smelted in Brazil and it is transformed into downstream products before being exported to the Middle East.
What kind of system would you need to be able to serve a demand at the right moment in a supply chain this complex?