The Chaos due to demand variation - How to plan more efficiently ?

Traffic jams on weekends or during a certain period of time during the weekdays are a perfect example of what happens during a demand surge. If the number of vehicles are too high , the chances of getting delayed to reach the desired location for people on the road increases rapidly , and thereby the overall productivity suffers due to this chaos !

This scenario perfectly illustrates what can happen in an organization when there's a sudden surge in demand without adequate resource planning. However , many of these surges can be predicted beforehand . For example , a restaurant can predict that the customers will be dining in more during the weekends compared to the weekdays or number of take away orders would be high during extreme weather conditions like snowing , raining or extreme heat. The point is , even though these are expected , many people still fail to control these variation inside their organisation due to poor planning or inaccurate prediction of the change in demand.

How does this happen ?

Why can't you plan ahead on managing these demand variations when you know that the demand surges can be predicted from the previous patterns ? This is a question that I ask to almost any business leaders who had to deal with high demand variations. The responses can be typically linked to the uncertainty of the responses from the market due to many changing factors that does not necessary allow them enough time to prepare. Also there can be seen some usual assumption of we can't be fully prepared ! This means that they are ready to accept the chaos as a usual practice during the "peak demand" during the day / week / month / year depending on the nature of the business.

An example of this is when a restaurant not knowing the maximum number of customers that could be coming in for dinning at the weekend and is unable to predict the percentage of items that might be ordered by the customers during the peak hours. This will naturally lead to long waiting times , wrong orders , excess or shortage of food ingredients , wrong delivery etc. Ultimately , resolving these issues will take more time leading to more chaos leading to lost customers and poor customer services. Indeed , a Huge Problem !

My observation in such cases is that there is a lack of clear reflections of each events of exceeding the capacity of serving customers in these organisations during these peak demands. This naturally leads to unstructured thinking and inadequate planning with an assumption that "no planning is enough". This is where the core of the problem lies.

What can be done ?

1. Start with prediction by using control charts - However impossible it may seem , every variations have a pattern and some causes . You will understand it if you collect more and more data on the demand surges during different points of time which are relevant for your business. These data points can be then plotted on a graph to understand the pattern of the variation. Control charts are very useful in such cases. It is a simple yet very powerful tool which can give you deep understanding on predicting the outcomes of your business processes.

In the above example , the demand of each products during the weekends can actually be plotted on a simple control chart.

An example of control chart is given below . You can see that a control chart has got an upper control limit (UCL ) and lower control limit (LCL ) to understand if the process is in control or not. The purpose of plotting this chart is to understand that if the pattern of variation will repeat in the future or not . If the data points does not exceed the upper and lower limits , the process is said to be in control. That means , you can expect that the numbers will be repeating in the same pattern in the near future . In our example , if the process is in control , the expected demand of a certain product can be predicted approximately between the limits. This is well explained by many statisticians and world class process experts such as Walter Shewhart and Dr Edwards Deming

Management is Prediction - Dr William Edwards Deming

2. Plan the resources - Once you have forecasted the demand approximately , you can now plan the resources like the manpower , inventory , logistics etc. It is important to understand how the increase in the demand will have a ripple affect on the complete value chain. This will help you to plan the resources according to their capacity and availability during the given period of time. You should also have a well designed communication system to alert people on putting the resources on time to avoid last minute confusions.

3. Train beyond the Job description - If you are running a business which will face demand surges during most times of the year , it is better that you consider to train your people beyond their designated positions. Multi tasking is a must to adjust the load among people during peak hours. If they are not cross trained to take up critical roles during an unexpected surge in the demand of certain products , they will end up doing it inefficiently or abandon it completely. This should be your number one priority once you have predicted the demands

4.Reflect on each events - It is true that variations cannot be avoided completely due to the inherent nature of our life . This does not mean that we should not predict or plan , instead this means that we should learn to predict and plan more accurately after each events of failing to meet the demand efficiently due to an uncertainty in the demand . There may be many reasons that can be controlled internally to reduce the variation in total. An example in this case is how the products are marketed and how long the restaurant stays open. The "Early bird" offer is a perfect example here. This reduces the burden of demand surges to the restaurant. There can be many such things that can be done inside an organisation. The point is to learn from each events rather than abandoning the complete planning process !

Conclusion:

Demand variations are an inevitable part of business, but they don't have to lead to chaos. By implementing robust resource planning strategies, organizations can navigate these fluctuations smoothly, ensuring they meet customer needs efficiently while maintaining operational stability. Whether dealing with weekend rushes, or seasonal demands, proactive planning and flexibility are key to turning potential chaos into a competitive advantage.

That's it for today , Hope you have enjoyed it . Also, please feel free to comment or suggest anything that could be worth discussing or writing in the future, Thank You !