For most businesses, the “long tail” is growing. You don’t have to be an internet retailer like Amazon to see it. Companies are dealing with more slow-moving items with intermittent demand and unpredictable demand patterns.
The result is that, all-too-often, inventory mixes are wrong.
Some products are being over-served, locking up precious working capital, while others are being under-served, and causing loss of margin and market penetration. Companies have too much of the items they don’t need and not enough of the items most in demand. This creates a significant opportunity to improve both their top and bottom line.
Later we we’ll discuss how to unlock this opportunity, but first let’s take a closer look at intermittent demand and what’s causing long tails.
What’s Causing Intermittent Demand to Grow?
The long tail concept was originally developed to describe the fractured demand commonly seen at Internet retailers like Amazon, but even companies with more traditional supply chains also experience the long tail effect, along with intermittent, unpredictable demand patterns. Three business trends are causing intermittent demand to grow: