At the level 3
The whole supply chain's capacity must be synchronised with the market demand changes, and market demand change is often unknown or uncertain. Forecasting has long been used to assist the planning of the supply chain's capacity but with limited successes. The credential of the analytical[ forecasting methods has not lived to its promises. As the result forecasting is either lucky or wrong. Thus supply chain managers must resort to other more effective means of managing capacity synchronisation and ultimately the supply cha1in responsiveness. Last two decades have seen some encouraging progress in achieving high level of supply chain responsiveness. Today, supply chains are more active in creating and developing flexible capacity and flexible structure through outsourcing, vertical disintegration, virtual networks, and sharing and pooling resources, to name just a few.But so far there is no single silver bullet discovered in this respect. The ways that industries manage their own capacity and re:sponsiveness varies significantly.
3.7 Bullwhip Effect
Capacity synchronisation has another major beneficial effect. It helps to alleviate the Bullwhip Effects in the supply chain, and the bullwhip effect isavery common phenomenon which has many negative impacts on the supply chain performances. Understanding the bullwhip effect is therefore essential to the supply chain design and planning.