Sufficiency, a new Supply Chain strategy
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“Due to distribution issues, certain products are temporarily unavailable.” It is a notification you can find quite often at some supermarkets worldwide.
The continuing progress of Supply Chain (SC) disruption is being burst out by an assortment of different circumstances, such as:
· The energy disruption in manufacturing hubs worldwide.
· COVID cases.
· Pandemic shutdowns and a world forced to stay at home.
· Labour shortages.
· Rises in consumer demand for goods, generating bottlenecks.
· Lack of capital infrastructure investment.
· Unleveraged transportation resources (a lack of trucks, drivers, ships and containers.)
· A lack of microchips resulted in massive bottlenecks in Chinese and USA ports.
There is a disconnection on free-market price levels and considerable shortages in all these circumstances. Consumers keep on ordering, and manufacturers go on shipping. Still, the global practice is unprepared to deal with current crazy buying-selling behaviours generated by the pandemic turmoil.
We can only understand the cascading bottlenecks in the context of “systems thinking”, which looks at the end to end SC as a sequence of nodes that must all flood seamlessly. However, each node becomes a bottleneck, generating a series of issues that hold back the flow of goods from the source to the consumer. The question is whether consumers’ demand pressured suppliers to manufacture more than they can and keep pace with a world of click-ordering blended with remarked scarcities.
Then, should we cut back on the advertising budget, whether it makes sense to promote products they cannot sufficiently stock?
Companies are drawing back on their third-quarter marketing for goods most impacted by the shortages, especially when discussing household items. Leaders expect supply-availability matters to begin to decline along the first half of 2022 for most of its brands.
Begin to consider innovative ways to shape consumer demand during SC disruptions.
Take into account’ Satiation Marketing’, a model that dates back to World War II, when consumers were requested to consume a lesser amount of goods to assign more resources to the war effort. It is similar to the concept of “Demand Management” in Procurement, which consists of cutting the total volume of requirement for an item for consumption to diminish total costs.
The Satiation model describes three significant ideas:
· The more frequently we consume something, the faster our satiation rate increases.
· Satisfaction levels go down as satiation levels go up.
· Taking a break among events declines satiation and augments the experiences’ satisfaction after the break.
Satiation Marketing implicates marketing efforts to limit demand in the promises of developing system operations. The idea is that when consumers notice restricted availability, the product becomes more pleasant and allows marketers to take advantage of a unique consumption chance and be interested in the rate of satiation.
The message is ‘get what you need today so you can have what you need tomorrow and as a result, does your neighbours’.
National and local government Public Rationing around preservation for the public good is an alternative concept, crucial to think. It can help diminish the consumption of indispensable items stuck by the SC to allow bottlenecks to weaken. It is also comparable to decreasing water and recycling, attracting public interest.
Summing up: the Public Rationing concept is a good sample of modifying the price/demand curve and not allowing the price stress to determine demand and supply matters. Retailers, manufacturers and consumers must consider this methodology as an alternative model.
Is it the time to become a less-consumer driven society?