In a supply chain, a high level of variability is undesirable because:
* Demand Uncertainty: High variability in demand makes forecasting difficult, leading to inventory imbalances.
* Production Disruptions: Variability in production processes can cause delays, affecting the entire supply chain.
* Increased Costs: Managing variability often requires holding higher safety stocks, leading to increased holding costs.
* Service Level Impacts: Variability can cause stockouts or overstock situations, negatively impacting customer service levels.
* Complexity in Coordination: High variability complicates planning and coordination efforts across the supply chain, reducing overall efficiency.
References:
Chopra, S., & Meindl, P. (2016). Supply Chain Management: Strategy, Planning, and Operation. Pearson.
Simchi-Levi, D., Kaminsky, P., & Simchi-Levi, E. (2008). Designing and Managing the Supply Chain.
McGraw-Hill.