Your supply chain’s infrastructure, staff and logistics of must be able to adapt fast to changes, mitigating disruptions. How can air freight services support you in this situation?
What are planned and unplanned product demand?
A planned demand comes from purchase orders (PO) committed to the future by the client or due to a forecast or an inventory agreement (floor stock agreement).
An example of this type of demand is the purchase of basic-needs products, such as cleaning supplies.
Despite the impact of external factors, consumers tend to constantly buy those products.
To identify the tendency of increase, you need to add only a few demographic indexes (population growth, income level, preferences for types of products).
Unplanned product demand
An unplanned demand (increase or decrease on demand) is usually related to:
- the seasonality/temporality of products,
- introduction of new products to the market,
- In & Out products*,
… although it can also be the consequence of failures and/or areas of opportunity in the supply chain caused by:
- poor inventory planning,
- defective materials,
- problems in production,
- products damaged by mishandling,
- loss of product due to customs inspection, etc.
An example of this type of demand: when new products are introduced to the market (new versions of cleaning products, new flavors of food, etc.)
When the sales begin, the distribution channels must be filled and wait for the reactions of the consumers to trigger next actions.
Despite the existence of studies and market analysis, meeting this “under construction” demand is a very challenging and complex activity, which can result on falling sales, loss of customers and even millionaire losses due to low sales, just to name a few.
* “In & Out” products are those offered for a certain period, with specific campaigns and very limited objectives.
We may dream about 100% planned sales funnels, but they depend on many factors that can cause unforeseen changes in demand.
Our best advice is to carry out a complete analysis of the market and go for a hybrid logistics plan, which shall enable you to get to the planned results with flexibility and options available to tackle the urgent or the unplanned situations.
Thus, the company can reduce to a minimum the financial risks reflected on inventories, obsolete inventories, expired inventories and operating costs.
You should also real:
Let’s set a straightforward example:
A global company in the cleaning sector decided to adopt the hyaluronic acid trend and it will launch a new laundry soap with this ingredient.
In addition to the investment in the purchase of new ingredients, it also adjusted the existing production line.
All protocols required to enable the production line were performed. Escalations (plant-level testing) of the new product were also managed to ensure that it was ready to go to market.
The supplier of the new machinery that was installed in the production line made a series of recommendations to ensure its correct operation. They sent guidelines regarding temperatures, pressure, equipment cleanliness and service life of some parts. The information was collected by the engineering, production, planning, indirect purchasing, and logistics teams.
It was estimated that, according to projected demand, the production line would operate 5 days a week with 12-hour shifts – attention: with no changes in demand. On the sixth day it would be given maintenance and cleaning. However, the level of acceptance of the product in the market has been a resounding success!
It has identified the need to increase production to 24/7, at least for the next 6 weeks, to replenish inventory.
According to the review carried out with the maintenance and planning area, it is required to:
1) place new urgent purchase orders with the suppliers of the ingredients and
2) generate new spare parts requisitions with the intention of preventing any failure in the production line.
Because suppliers did not have this forecast (there were changes in demand that had not been planned), they were not prepared!
The only option available to move inventory (both raw materials and spare parts) is using premium critical air freight solutions.
Additionally, the planning and maintenance teams must re-analyze their supply plans to ensure that demand will be met on the coming months. The planning manager has mentioned that changes in demand are a possibility and “surely it will not be the only occasion that products must be transported using air freight solutions.”
Why should you choose Europartners Group air freight services to help you when there are changes in demand?
We also have air consol solutions from different parts of the world to get the space you need.
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