Which supply chain strategy should be implemented when lead time is short and demand is known?
Which supply chain strategy should be implemented when lead time is short and demand is known?
When lead time is short and demand is known, continuous replenishment is the optimal supply chain strategy. This approach aims to continuously replenish inventory in response to known demand patterns, thus ensuring that stock levels remain sufficient without the risk of overstocking. It minimizes lead times and consistently meets customer demand, making it the most efficient strategy in this scenario.
Push inventory is the supply chain strategy that should be implemented when lead time is short and demand is known. In this strategy, inventory is pushed into the supply chain in anticipation of demand. This is done to ensure that products are readily available to customers and to minimize lead time. This strategy is particularly useful when demand is known and stable, and when lead time is short. By pushing inventory into the supply chain, companies can ensure that products are available when customers need them and can reduce the risk of stockouts.
Continuous replenishment is an ideal strategy in scenarios where demand patterns are consistent and lead times are short.