The task of logistics is to ensure the availability of goods in accordance with the required level of service while meeting a number of requirements, such as: a cost level acceptable from the point of view of the value created, speed and reliability of deliveries, or economical use of resources. In the functioning of supply chains in the FMCG sector, which includes everyday consumer goods, we are dealing with high expectations regarding the level of service, the final dimension of which is the availability of products on the store shelf acceptable to the consumer making daily purchases. This level of service is influenced by two-way groups of factors (Figure 1): from the market side, these are demand, which is characterized by a random nature and high volatility, as well as the sensitivity of forecasts to many factors; while looking from the other end of the supply chain, these are problems with the integration of the logistics process resulting from the network nature of the supply chain and events that occur in it, such as process errors, business fraud, and theft.
However, the fundamental problem that logistics faces in these types of supply chains is the difference between the time objectively necessary to produce and deliver a product and the time given to the supplier by the customer (institutional recipient: distributor, retailer) to fulfill the order (Figure 2).
This problem, known in the literature as the order fulfillment time gap, is often not noticed, mainly due to the low degree of supply chain integration and the resulting focus of employees participating in the logistics process on its fragments within the scope of their competencies and authorizations, as well as on solving the company’s internal problems related to logistics.
Since it is not possible to eliminate the time gap under conditions of independent demand, its significance can be marginalized in 3 ways:
1) by covering it with inventory, which involves the need to incur additional costs of maintaining it,
2) by shortening the actual response time of the supply chain to an order by improving the internal operations of the companies that form it and improving the flow of information and products at the interfaces between them,
3) by improving the quality of the forecast through better demand recognition.
The article comes from the magazine “Logistyka” 5/2007.