Fit for Turbulent Times: Reducing Demand Variability and Increasing Supply Chain Flexibility

Purpose: The chemical supply chain has come under pressure. In times of high market volatility, its focus on efficiency is increasingly posing a threat to firm profitability. The purpose of this paper is to identify actionable measures, suitable for counteracting demand volatility in this industry. Design/methodology/approach: This paper provides an overview of measures aiming at reducing demand variability and increasing supply chain flexibility. By means of case study research, these measures are then investigated for their practical applicability in the chemical industry. Findings: The intensity of demand variability, its root causes, and its effects on supply chain performance were investigated in one real-world chemical supply chain. Applicable measures for improving the “fit” between flexibility need and flexibility potential were identified. The results showed that the case study company acted rather conservatively in its selection of modern management practices. Nevertheless, the study also revealed that the company was able to significantly improve its ability to deal with variable demand. Research limitations/implications: The paper’s results are drawn from a single case study. While the case study supply chain is likely to be representative for many supply chains in the industry, we are calling for further in-depth case studies to be conducted in different environments to allow more substantiated conclusions. Originality/value: This paper provides a comprehensive review of the literature on demand management measures. Additionally, a methodology for a fact-based selection of applicable measures to improve specific demand management challenges is provided.