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Since material requirements planning (MRP) was invented in the early 1960s, the approach to planning a supply chain has not fundamentally changed. It began with the assumption that supply chains are planned using a forecast of future demand as the input on which the rest of the planning is based. Simply put, plans were forecast-driven.

This results in plans that are rigid and fragile and can’t be carried through when there’s uncertainty, leading to poor performance. Following the recent supply chain disruptions, organizations are now demanding greater resilience. But the demand-driven principle which has for so long gone unchallenged makes it’s hard to see how this can be achieved.

So what can you do?

• Focus on uncertainty rather than exclusively on accuracy in your planning — forecast-driven is not the same as demand-driven.
• Don’t constantly propagate your demand signal through the supply chain — this allows the supply chain to take full advantage of the new focus on uncertainty.
• Use uncertainty metrics rather than accuracy metrics to evaluate supply chain decisions.