Why the "Made in X" Doesn't Tell the Whole Story

Walk into any store, turn over a product, and you'll probably find a small label that reads "Made in Vietnam," "Made in Spain," "Made in China," or another country of origin. Most of us assume that this tells us where the product came from.

In reality, it tells only the final chapter of a much longer story.

Modern supply chains are global ecosystems, where dozens, or even hundreds, of companies across multiple continents collaborate to create a single finished product. The country printed on the label often represents only the location of the final assembly, not where the product's journey truly began.

Take a smartphone as an example.

Before it reaches your pocket, its components may have traveled thousands of kilometers:

• Rare earth minerals extracted in Africa.
• Semiconductor wafers manufactured in Taiwan or South Korea.
• Memory chips produced in Japan.
• Camera modules assembled in another country.
• Display panels sourced from specialized manufacturers elsewhere in Asia.
• Batteries produced by dedicated suppliers.
• Final assembly completed in Vietnam, China, or India.

When the phone finally receives its "Made in..." label, it has already crossed multiple borders and passed through an intricate network of suppliers, manufacturers, logistics providers, ports, warehouses, and distribution centers.

That label captures the final step. not the entire journey. But why It Matters?

Understanding this complexity helps explain why global events can affect products seemingly unrelated to the countries involved.

A disruption at a semiconductor plant, a port strike, a drought affecting raw materials, or new trade regulations can ripple through the entire supply chain. Even if the final assembly takes place in one country, critical components may originate from many others.

This interconnectedness is why supply chain resilience has become a strategic priority for businesses worldwide.

Global supply chains are often viewed through the lens of cost reduction, but they also represent collaboration on an extraordinary scale.

Each participant contributes specialized expertise:

• Raw material producers
• Component manufacturers
• Technology innovators
• Logistics providers
• Quality inspectors
• Distributors
• Retailers

The finished product is the result of thousands of coordinated decisions made across different organizations, cultures, and time zones.

The next time you pick up a coffee machine, a bicycle, or a smartphone, take a moment to look beyond the country printed on the label.

That simple phrase "Made in..." isn't the whole story. It's the final signature on a journey that may have spanned dozens of countries, hundreds of suppliers, and countless logistical operations before arriving in your hands.

In supply chain management, every product tells a global story. The label simply reveals where the last chapter was written.

SMED: The Lean Technique That Can Transform Manufacturing Efficiency

In today's competitive manufacturing environment, companies are constantly searching for ways to increase flexibility, reduce costs, and respond more quickly to customer demand. One of the most powerful Lean Manufacturing techniques for achieving these goals is SMED, which stands for Single-Minute Exchange of Dies.

Despite its name, SMED is not limited to changing dies in a press machine. It is a systematic methodology for reducing setup or changeover times in any manufacturing process. Whether switching between product models, adjusting machine settings, or preparing production lines, SMED helps organizations minimize downtime and maximize productivity.

What is SMED?

SMED was developed in the 1950s and 1960s by Japanese industrial engineer Shigeo Shingo as part of the Toyota Production System. The primary objective is to reduce setup times to less than ten minutes or at least make them dramatically shorter than before.

Long changeovers force manufacturers to produce large batches in order to justify the downtime. While this may seem efficient, it often results in excessive inventory, longer lead times, and reduced flexibility. SMED addresses this challenge by making changeovers so quick that smaller production batches become economically viable.

The SMED methodology follows three main steps:

1. Separate Internal and External Activities

Internal activities can only be performed while the machine is stopped, whereas external activities can be completed while the machine is still running. The first step is to identify each activity and determine whether it truly requires production to stop.

2. Convert Internal Activities into External Ones

Many tasks traditionally performed during downtime can actually be completed beforehand. Preparing tools, preheating equipment, organizing materials, or verifying settings before shutdown significantly reduces idle time.

3. Streamline Remaining Internal Activities

For the tasks that must occur during the changeover, the goal is to simplify and standardize every step. Quick-release fasteners, standardized tooling, parallel operations, and visual work instructions all contribute to faster and more consistent setups.

Reducing setup times delivers benefits that extend far beyond the production floor. Faster changeovers enable manufacturers to produce smaller batches without sacrificing efficiency, leading to lower inventory levels and improved responsiveness to customer demand.

Let´s see a simple example to illustrate this technique.

Imagine a packaging line that requires 90 minutes to switch from one product size to another. By analyzing the setup process, the team discovers that many tools are collected only after the machine stops, settings are adjusted manually, and operators perform tasks sequentially.

After applying SMED principles, tools are prepared in advance, machine settings are standardized, and two operators perform different tasks simultaneously. The result? The changeover time drops from 90 minutes to just 15 minutes. The company can now produce smaller batches, reduce inventory, and respond more quickly to changing customer orders.

SMED is more than a technique for speeding up machine setups, it is a mindset focused on eliminating waste and improving operational agility.

In a world where customer expectations continue to evolve and product lifecycles become shorter, the ability to change production quickly is a significant competitive advantage.

Whether you manage a large manufacturing facility or a small production line, implementing SMED can unlock hidden capacity, improve efficiency, and support a more responsive and resilient supply chain. Sometimes, the biggest improvements come not from working harder, but from making every minute count.

Master Production Scheduling (MPS): The Heart of Effective Manufacturing Planning

Master Production Schedule (MPS) is often described as the bridge between business strategy and operational execution. While sales forecasts, customer demand, and strategic objectives define what an organization wants to achieve, the MPS translates those goals into a realistic and actionable production plan.

Simply put, the Master Production Schedule specifies what products will be produced, in what quantities, and when. It serves as the primary driver for Material Requirements Planning (MRP) and provides visibility across manufacturing, procurement, inventory management, and customer service functions.

A well-developed MPS helps organizations balance demand and supply while optimizing resources. It enables companies to:

• Meet customer delivery commitments with greater confidence
• Improve inventory management and reduce excess stock
• Enhance production stability and resource utilization
• Identify capacity constraints before they impact operations
• Support cross-functional alignment between sales, operations, and manufacturing

Without a disciplined MPS process, organizations often experience frequent schedule changes, inventory imbalances, expedited orders, and declining customer satisfaction.

Key Inputs to the MPS:

• Demand forecasts
• Customer orders
• Inventory status
• Production capacity
• Business policies and strategic objectives

The scheduler must continuously evaluate these inputs to ensure that production plans remain feasible and responsive to changing market conditions.

An effective Master Production Schedule is:

- Realistic – aligned with available capacity and resources.

- Stable – minimizes unnecessary schedule changes that disrupt operations.

- Responsive – adapts to legitimate shifts in customer demand.

- Visible – provides a clear roadmap for manufacturing, procurement, and distribution teams.

Organizations often use time fences and schedule freezing policies to balance stability with flexibility, protecting near-term production commitments while allowing adjustments further into the planning horizon.

In today's environment of volatile demand, supply chain disruptions, and increasing customer expectations, the Master Production Schedule is more than a planning tool, it is a strategic capability. 

Companies that establish a disciplined MPS process gain better operational control, improved service levels, and stronger financial performance.

Successful production planning is not about creating the perfect forecast; it is about developing a realistic plan that aligns demand, supply, and organizational objectives. The Master Production Schedule remains one of the most powerful tools available to achieve that balance.

 

Master Planning of Resources: The Backbone of Supply Chain Excellence

In modern supply chain management, successful planning depends on aligning business strategy with operational execution. 

The MPR framework helps organizations balance demand, capacity, inventory, and resources while improving customer service and operational efficiency. Each stage builds upon the previous one, creating an integrated planning process that supports better decision-making across the entire supply chain.

1. Business Plan

The process begins with the Business Plan, which defines the organization’s strategic direction. This high-level plan establishes financial objectives, growth targets, market positioning, product strategies, and overall business priorities.

The Business Plan typically covers a long-term horizon of one to five years and serves as the foundation for all operational planning activities. It provides guidance on revenue expectations, investment decisions, expansion opportunities, and resource allocation.

2. Sales & Operations Planning (S&OP)

Sales & Operations Planning translates strategic business objectives into an achievable operational plan. At this stage, cross-functional teams from sales, operations, finance, procurement, and supply chain collaborate to balance market demand with supply capabilities.

S&OP creates alignment between customer expectations and operational capacity. Organizations review forecasts, inventory levels, production constraints, and financial targets to develop a consensus plan that supports both profitability and customer service.

3. Demand Management

Demand Management focuses on understanding, forecasting, and managing customer demand. This step combines forecasting techniques, market intelligence, customer orders, promotional plans, and historical sales data to generate accurate demand projections.

Effective demand management reduces uncertainty and improves responsiveness across the supply chain. Companies that maintain accurate demand visibility are better positioned to optimize inventory, improve service levels, and minimize operational disruptions.

4. Master Production Scheduling (MPS)

The Master Production Schedule converts demand plans into a detailed production timetable. The MPS determines what products will be produced, in what quantities, and when production will occur.

This stage acts as the critical link between customer demand and manufacturing execution. A well-structured MPS ensures production stability while maintaining flexibility to respond to changing customer requirements.

5. Rough-Cut Capacity Planning (RCCP)

Once the Master Production Schedule is developed, Rough-Cut Capacity Planning evaluates whether sufficient capacity exists to support the production plan. RCCP focuses on critical resources such as labor, machinery, production lines, and key work centers.

The objective is to identify potential bottlenecks before detailed planning begins. If capacity constraints are detected, planners can adjust schedules, increase resources, or revise production priorities.

6. Material Requirements Planning (MRP)

Material Requirements Planning calculates the materials, components, and raw materials needed to support the production schedule. MRP systems analyze bills of materials, inventory balances, lead times, and planned production orders to determine procurement and manufacturing requirements.

MRP plays a central role in ensuring materials are available when needed while minimizing excess inventory and carrying costs. It also improves supplier coordination and purchasing efficiency.

7. Capacity Requirements Planning (CRP)

Capacity Requirements Planning expands on RCCP by performing a more detailed analysis of production capacity at the operational level. CRP evaluates workload requirements for specific work centers, machines, and labor resources.

This step helps organizations validate whether production schedules are realistic and achievable. Detailed capacity analysis supports improved scheduling accuracy, resource utilization, and operational efficiency.

8. Production Activity Control (PAC)

Production Activity Control represents the execution phase of planning hierarchy. PAC manages the release, scheduling, monitoring, and control of production orders on the shop floor.

At this stage, organizations track actual production performance against planned schedules, manage work-in-process inventory, resolve operational issues, and ensure timely order completion. Effective PAC improves production visibility, reduces delays, and supports continuous operational improvement.

Digital twin: Conecting the digital and real world

The term “digital twin” might sound futuristic, but it’s quickly becoming a practical tool reshaping how operations and supply chains work today.

In simple terms, a digital twin is a virtual replica of a real-world object, system, or process; anything from a single machine to an entire manufacturing network.

Imagine your factory, warehouse, or supply chain recreated in a digital space. This virtual version mirrors what’s happening in real time, thanks to data flowing in from sensors, IoT devices, and business systems. Every movement, transaction, and temperature change can be captured and reflected in the digital twin.

So, what’s the point? The value lies in simulation and insight. A digital twin allows you to experiment and test scenarios without affecting actual operations. You can explore what might happen if a supplier goes offline, if demand spikes unexpectedly, or if a new route could shorten delivery times. Instead of reacting to problems after they occur, you can anticipate and plan for them.

This technology helps organizations make smarter, faster decisions. Maintenance can become predictive instead of reactive. Inventory planning can adjust automatically to real-time demand. Logistics teams can visualize the entire flow of goods and identify inefficiencies before they cause delays.

Ultimately, a digital twin acts as your operation’s virtual brain, continuously learning, adapting, and optimizing. It bridges the gap between the physical and digital worlds, giving supply chain leaders greater visibility, control, and confidence in every decision.

The future of operations isn’t just physical anymore. It’s mirrored, modeled, and improved through digital twins.

 

Does a change in price has always the same effect in customer demand?

 

Price elasticity of demand is a measurement of the change in the consumption of a product in relation to a change in its price, in other words, how sensitive the quantity demanded is to its price. 

Economists use price elasticity to understand how supply and demand for a product change when its price changes.

Depending on its elasticity, a good is said to have elastic demand, inelastic demand, or unitary elastic demand.

If demand is elastic, the quantity demanded is very sensitive to price.

If demand is inelastic, the good's demand is relatively insensitive to price, with quantity changing less than price.

If demand is unitary elastic, the quantity falls by exactly the percentage that the price rises.

Two important special cases are perfectly elastic demand, where even a small rise in price reduces the quantity demanded to zero; and perfectly inelastic demand, where a rise in price leaves the quantity unchanged. 

Factors That Affect Price Elasticity of Demand

Availability of substitute goods: The more and closer the substitutes available, the more elastic is that good likely to be, as people can easily switch from one good to another if an even minor price change is made. If no close substitutes are available, the demand inelastic.

Breadth of definition of a good: The broader the definition of a good or service, the lower the elasticity.

Percentage of income: The higher the percentage of the consumer's income that the product's price represents, the higher the elasticity (more elastic) tends to be, as people will pay more attention when purchasing the good because of its cost.

When the goods represent only a negligible portion of the budget the income effect will be insignificant and demand inelastic,

Necessity: The more necessary a good is, the lower the elasticity (more inelastic), as people will attempt to buy it no matter the price.

Duration: For most goods, the longer a price change holds, the higher the elasticity is likely to be, as more and more consumers find they have the time and inclination to search for substitutes. 

Brand loyalty: An attachment to a certain brand can override sensitivity to price changes, resulting in more inelastic demand.

Addictiveness: Goods that are more addictive in nature tend to be more inelastic. This is because consumers treat such goods as necessities and hence are forced to purchase them, despite even significant price changes.

Based on all of the above, it is important that the demand forecaster is familiar with pricing actions taken by the company and anticipate their impact on demand.

Logistionary: Decoupling inventory

 

Decoupling inventory is the process of setting aside extra parts or raw materials to ensure there aren’t any delays or disruption in the production of finished goods in the event of a supply shortage or machinery breakdown.

In simple terms, decoupling inventory is a type of safety stock, but what it hedges against is slow production and stoppage, not unseen fluctuations in demand, acting as a buffer that allows to continue fulfilling orders even as production issues are happening.

The main benefits of decoupling stock are:

Increased efficiency: Can increase efficiency across production lines and supply chains by allowing each stage of production to work autonomously even in the event of a disruption.

Increased flexibility: Helps mitigate the effects of unforeseen circumstances helping businesses become more agile and ready to respond to unexpected disruptions in the supply chain.

Perform spot maintenance on parts of your manufacturing equipment: Decoupling inventory is particularly advantageous in the event of a facility outage for repairs or machine maintenance.

Provides Protection During Periods of Uncertainty: When manufacturers are unable to obtain sufficient raw materials to finish producing a product, decoupled inventory offers protection to continue production without any delays.

COVID-19: impacts on supply and demand

How resilient and responsive is your supply chain? If you did not know before, there’s a chance you will soon find out.

There’s been a lot of talk about risk management with regards to Brexit, which seemed like enough of a challenge, but now many nations around the world are facing an event that, unlike Brexit, couldn’t be predicted or properly planned for.  

As supply chains tend to be highly customer-focused, changes in customer behaviour and demand has impacts throughout the supply chain.

In China, retailers reported changes to the demand profiles of specific products, as shopper behaviour changed in response to the outbreak of COVID-19.

One trend observed since the outbreak has been a surge in online shopping. This is not surprising and a consequence of people going out less, in response to government advice to self-isolate.

KFC and Pizza Hut started trialling contactless delivery services in an attempt to reduce person-to-person transmission and JD.com introduced five vending machines to a residential compound in Beijing, offering residents 24/7 access to fresh fruit, vegetables and more. 

Demand and supply planning becomes difficult when demand patterns change.  In the case of COVID-19, there isn’t a sufficiently comparable historical event that can be used to get a sense for customer demand.  For products that are seeing surges in demand as a result of the outbreak, supply chains will likely struggle with replenishment and lead times will increase, unless additional sources can be found and/or capacity can be increased at current suppliers. This will affect on-shelf availability (OSA).

Some retailers have attempted to actively manage demand for products that shoppers seem to be stockpiling.  UK retailer Boots has tried to reduce the demand for hand sanitizers by introducing signs on the shelves that limit customers to two per shopper.  In Australia, Woolworths has applied a quantity limit of four packs of toilet paper per purchaser.

Retailers should consider the possibility of a scenario in which consumers go out less and demand more grocery home deliveries.  If this happens, retailers may need to enhance online delivery capacity in order to meet increased online demand. 

Finally, businesses need to understand where their supply network partners are located and consider what the impact of the virus is in each of those locations.  They should also consider how worsening circumstances might affect operations at these locations.  Businesses will need to assess whether they can reduce risk by procuring finished goods and raw materials from alternative sources.  

Situation is changing rapidly and every day we have new news, but ultimately the reality is that supply chains will be severely impacted, but will also be a key player in solving the crisis that is yet to fully materialise across the globe.

7 Characteristics of the best Demand Planners

Without a shadow of a doubt, this is one of the best articles I have read recently, and it encompasses all the key traits that make a great Demand Planner.

Difficult to pick up just a few key points, as all of them are too valuable to be left out, but here I go:

- The difference between success and failure may not be dependent on intellect or even analytical ability, but on leadership skills.

- They are not afraid of voicing their opinions and lead from the front, bringing solutions, not problems.

- They will work on being able to express ideas or information clearly and if they do this while seeking to understand the other person’s needs and concerns.

- They follow less their gut instinct and try to find a quantitative basis for an idea.

- They demonstrate an interest in personal learning and development, seek feedback from multiple sources about how to improve and develop.

-  They are being able to communicate risk and uncertainty.

- They are creative in their approaches and are not afraid to try something new. They are not locked in on the way we used to do things, they do not work in a silo, they collaborate with others and finally, they are very customer-centric, focusing on adding value both internally and externally.

- They have the ability to stand strong and be wrong with confidence.  They are not afraid to take chances and learn from their setbacks and failed attempts.

http://demand-planning.com/2019/02/26/7-characteristics-of-demand-planning-rock-stars/

Forecast bias

In this post we are going to touch on one of the most important KPIs that any demand planner should focus on: Forecast bias

Forecast bias is the general tendency for a forecast to be higher or lower than the actual value.

Forecast bias is distinct from forecast error in that a forecast can have any level of error and still be completely unbiased. For instance, even if a forecast is fifteen percent higher than the actual value half of the time and fifteen percent lower than the actual value the other half of the time it has no bias. If the forecast is on average fifteen percent higher than the actual value has both fifteen percent error and fifteen percent bias.

Bias can exist in statistical forecasting or in judgment methods. With statistical methods, the forecasting model must be adjusted or switched to a different model. For judgment methods however, bias can be conscious and driven by certain incentives provided to the forecaster or it can be unconscious.

How to simply calculate forecast bias at an aggregated level?

BIAS = Historical Forecast Units minus Actual Demand Units.

The impact of bias can mean that either an organization is holding too much inventory (over-forecast bias) or missing sales due to service issues (under-forecast bias).

Why Demmand Planning

Over the next post I will try to focus particularly on demand planning. No wonder, demand planning has become a key part of any supply chain department, and its importance has grown as the demand has become one of the key indicators for any end product.

But, how I got into demand planning and forecasting?

Since I finished my degree and started working at a Distribution Centre´s finance department, I was instantly fascinated by supply chain, and became more and more interested in pursuing a career in this field as the time passed. 

The first drawback when I started looking for a role in demmand planning came in the form of my qualifications and background. Having a non engeenier degree was saw at first as a handicap to pursue a career in supply chain by many people, but I was determined to get my foot into a role that could provide me with the experience and know how needed to start a succesfully career in logistics.

It wasn´t until I get the opportunity to join the logistics department of one of the biggest companies in its area of business when I realiced how lucky I was to have the opportunity to work in an area that I love. And it didn´t take long before I corroborate how amusing, dinamic and exciting the role of demand planner was.

I had a vague thought of what demand planning was, and reduced it to putting a couple of years of sales history into a forecasting software, sit and whatch the magic happen, obiously it didn´t take me any long to realize that forecasting and planning is a mixture of hundreds of different things and only if all of them run smoothly, the whole system works.

 

Nowadays I try to keep things simple, experience is key to stay ahead of the many aspects that may affect the future demand of a particular product, whether this product will feat in a catalogue or the strikes in a factory in China will delay the goods you were expecting to receive in your warehouse, demand forecasting will always be very influenced by certain elements that you won´t be able to control, therefore, understanding the market you will be working in and the different specific situations a product will go through until it reach the shelf of an outlet will help, you but it won´t guarantee your predictions will be accurate. Only when you try to see the big picture and encompass all the different aspects you will be getting closer to a prediction that hopefully in the end will not be too far from the real figure!

Forecasting and demand planning is not a science, and the different elements involved in any demand analysis will prevent any forecaster to present an exact figure, however, the development of new forecasting systems has helped a lot to improve the predictions we make.

In the next post I will try to delve in some other aspects that make forecasting and demand planning one of the most exciting areas to work in. I hope I see you around