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2013/09/12

Planning beyond commodities

Planning beyond commodities

By Howard Roddie, Senior Supply Chain Consultant (@HowardRoddie)

Water.  It’s the ultimate commodity1.

We drink it.  Sometimes raw, from a tap, well or stream.  Sometimes it sparkles in fancy bottles from fashionable springs in distant countries.  Other times we walk miles to collect a murky liquid from an unreliable source.

We drink it in other ways too, in beer, tea, coffee and coke.  Even whisper it, in whiskey, sometimes as ice.  We wash , process and cook our food with it.  We quench the thirst of the crops and animals.

Oh, and we bathe in it.  We wash our clothes in it and just about everything we make needs it.

But water is scarce.  Everywhere.  In the UK, droughts are becoming more prevalent and more critical at the same time as usage increases and climate becomes less predictable.  In Africa, it can be a matter of life or death.

I don’t think I’m saying anything you don’t know, but the question is, why am I saying it here?  Well, if you haven’t already guessed, the answer is supply and demand.  It’s what we manage and balance in the supply chain.

Typically, we’re asked to manage multiple SKU’s with their different streams of demand, often hundreds of thousands of nodes, sometimes millions.  But the same principles apply to a single central SKU.

Now imagine if we could accurately model demand for water and we knew the stocks of our reservoirs…Imagine if we had middle, upside and downside for our rainfall and other supplies and we could scenario plan…

The thing is, here at FuturMaster, we’ve already done it.  Not for water, but for other big commodities.  Water is no different.  Want to know when you’ll have a shortage or a glut?  Want to weigh up the best options for usage in both situations?  Want to know when and where to build that crucial extra de-sal plant or how to factor in changing groundwater levels?  Then maybe you should talk to us.  We want to help.

[1] OK, oxygen is probably more ultimate, and so is sunshine… But both of those require blue sky thinking.

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