Skip to content
Search AI Powered

Latest Stories

Perspective

The economic impact of supply chain synchronization

Technology that matches supply and demand may be a factor in today's high unemployment rates.

One of the reasons behind the continued high employment rate, ignored by the media and so-called economic experts, is supply chain synchronization—the practice of using software to match supply with demand. Because companies have deployed software (such as demand sensing programs) that aligns inventory with consumers' purchases, there are fewer spikes in production, and thus there is less demand for workers on the production line.

Supply chain synchronization does not show up in macroeconomic discussions because it's a relatively new phenomenon. In classic economic theory, swings in output are a normal part of the business cycle. As consumption falls, manufacturers find themselves stuck with large quantities of unsold product. They then curb production and lay off workers. After excess inventory has been depleted, manufacturers resume production and hire back workers so they can meet consumer demand.


But the world has changed, and it's time to call this theory into question. In the last decade, software firms have developed applications to calculate inventory holdings based on actual demand rather than on forecasts based on historical consumption patterns. Companies that deploy this type of software can better match output to demand, thus flattening the boom and bust cycle of production. (For more on this development and its potential consequences, see "Demand sensing greatly improves forecast accuracy.")

With few or no production spikes, a manufacturer does not have to hire a drove of workers to run its equipment and package its finished goods. Consider, too, that more companies are relying on automation and software to handle production and reduce the number of employees required.

Hence supply chain synchronization, matching demand to supply, keeps production more stable and holds down hiring in the manufacturing sector. And it's a trend that here's to stay as more companies deploy software to calculate forecasts based on actual consumer demand.

Recent

More Stories

team collaborating on data with laptops

Gartner: data governance strategy is key to making AI pay off

Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.

"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”

Keep ReadingShow less

Featured

manufacturing job growth in US factories

Savills “cautiously optimistic” on future of U.S. manufacturing boom

The U.S. manufacturing sector has become an engine of new job creation over the past four years, thanks to a combination of federal incentives and mega-trends like nearshoring and the clean energy boom, according to the industrial real estate firm Savills.

While those manufacturing announcements have softened slightly from their 2022 high point, they remain historically elevated. And the sector’s growth outlook remains strong, regardless of the results of the November U.S. presidential election, the company said in its September “Savills Manufacturing Report.”

Keep ReadingShow less
container ships at dock port of savannah

54 container ships now wait in waters off East and Gulf coast ports

The number of container ships waiting outside U.S. East and Gulf Coast ports has swelled from just three vessels on Sunday to 54 on Thursday as a dockworker strike has swiftly halted bustling container traffic at some of the nation’s business facilities, according to analysis by Everstream Analytics.

As of Thursday morning, the two ports with the biggest traffic jams are Savannah (15 ships) and New York (14), followed by single-digit numbers at Mobile, Charleston, Houston, Philadelphia, Norfolk, Baltimore, and Miami, Everstream said.

Keep ReadingShow less
EDGE 2024 diversity educational session

Diversifying your supply chain beyond China to minimize risk

Jason Kra kicked off his presentation at the Council of Supply Chain Management Professionals (CSCMP) EDGE Conference on Tuesday morning with a question: “How do we use data in assessing what countries we should be investing in for future supply chain decisions?” As president of Li & Fung where he oversees the supply chain solutions company’s wholesale and distribution business in the U.S., Kra understands that many companies are looking for ways to assess risk in their supply chains and diversify their operations beyond China. To properly assess risk, however, you need quality data and a decision model, he said.

In January 2024, in addition to his full-time job, Kra joined American University’s Kogod School of Business as an adjunct professor of the school’s master’s program where he decided to find some answers to his above question about data.

Keep ReadingShow less
warehouse problem medical triage strategy

Medical triage inspires warehouse process fixes

Turning around a failing warehouse operation demands a similar methodology to how emergency room doctors triage troubled patients at the hospital, a speaker said today in a session at the Council of Supply Chain Management Professionals (CSCMP)’s EDGE Conference in Nashville.

There are many reasons that a warehouse might start to miss its targets, such as a sudden volume increase or a new IT system implementation gone wrong, said Adri McCaskill, general manager for iPlan’s Warehouse Management business unit. But whatever the cause, the basic rescue strategy is the same: “Just like medicine, you do triage,” she said. “The most life-threatening problem we try to solve first. And only then, once we’ve stopped the bleeding, we can move on.”

Keep ReadingShow less