Understanding Supply and Demand in your Supply Chain
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Understanding Supply and Demand in your Supply Chain

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Supply and Demand in your Supply Chain

If you have been following me as I was playing the Breakthrough in Training Scenario, you may have seen me play around with the Car industry. Supply and Demand in the Car’s supply chain is quite tricky as you have 3 parts that themselves require more parts to eventually reach the stage of manufacturing a Car.

To manufacture a Car you need:

Car Body require Steel (Iron + Coal), Glass (Silica), and Plastic (Oil)

An engine requires Steel (Iron + Coal)

Wheel and Tries require Ruber and Steel (Iron + Coal)

You can see how much of an investment is required to do everything. You are better off by using what is available until you can slowly do your own investments as evident in the Breakthrough in Training Scenario episode called Cars. In this tutorial, I do everything from scratch and show you what happens as you start and you expand. I even cover how a Warehouse may show you that your factory has a higher demand when you don’t really have demand.

Lessons learned about supply and demand:

1. Demand is from top to bottom

Always start from the retail stores going down to the mine/farm. Your store may need more Cars meaning your warehouse might not have enough cars (if using a warehouse), which may mean you are not producing enough, check each unit and see what is the bottleneck, then go to that factory and check again what is the bottleneck, usually Steel becomes an issue as you use it in all 3 parts for a Car and you will need to manufacture more. As you fix the bottlenecks you will see that the supply and demand will balance out without having to make new factories.

2. Supply is from bottom to top

Always start checking your supplies from the mine/farm. Is your Iron or Coal supply good? If it is then your steel supply is lacking because you aren’t producing enough. Don’t increase supply until you know where the bottleneck is, don’t make another mine when the issue is with the Steel factories and not because of the lack of Iron or Coal.

3. Pay attention to Supply and Demand in each Unit

If the Purchase unit has supply problems, see the supplier, that is the bottleneck, then analyze in that supplier what the bottleneck is. Car Body usually has supply issues at the start, the problem may come down to not having enough supply of Steel because when you look at the Sales unit in Steel, their supply is low meaning you are not manufacturing enough. So the bottleneck was in the manufacturing of Steel and not in the Iron or Coal supplies.

Keep practising and playing around to see how things work. Leave a comment below and let me know what you think 🙂

Also See: Tutorials for Capitalism Lab

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Capitalism Lab Story

Playing Capitalism Lab in my free time for fun.
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