Six Years Ago This Month - Volmageddon Began

A time to reflect on the Great Volatility Armageddon of the 2020 Pandemic.

Manufacturing chaos rarely starts with machines or people.

• It starts with distorted signals.
  

An expedite list is not a list of actions.

• It’s a map of where the system is out of sync with itself.

  • Every line on that list carries a message if you know how to read it:

  • “Material is arriving in a different rhythm than demand.”

  • “The system is guessing instead of sensing.”

  • “Upstream uncertainty is being amplified, not absorbed.”

“The plant is reacting to shadows, not reality.”

When information flow becomes unstable, it ripples through the entire production ecosystem. A small deviation upstream becomes a scramble downstream. A one-day shift turns into a four-day swing.

The system starts improvising just to keep moving.

That improvisation accumulates.

Let's see this in action:
The classic bullwhip formula shows how forecast updates in an order-up-to system amplify demand variability.

For a moving-average forecast, the variance amplification ratio is 1 + (2L/h) + (2L²/h²), where L is lead time in days and h is the planning bucket size in days.

Let’s take a single SKU with an average daily demand of 1,000 units, a 10% forecast error (daily sigma of 100), a weekly bucket (h=7 days), and a 10-day lead time (L=10).

Plugging in the numbers gives a ratio of nearly 8. That means order swings are 2.8 times wider than demand fluctuations (the square root of 8).

On the shop floor, a modest 10% demand blip turns into 28% shop order chaos: one week you’re rushing extra production, the next you’re staring at idle machines, inventories bloat.

The signal distortion is creating so much artificial volatility that no wonder it blows through a 95% safety stock buffer like it isn't even there.

The safety stock was sized for 10% real demand noise and its feeling 28% order chaos.

And that noise shows up as a bloated expedite list and a bloated stockout list.
- Most manufacturing teams look at an expedite list and see “work to do.”

What they’re actually seeing is the nervous system of the plant misfiring.
- You can lecture people about discipline.
- You can run standup meetings.
- You can push for better communication and alignment.
- None of that matters if the signals themselves are warped.
- Healthy systems don’t have to fight their own signals.
- Healthy systems breathe - they absorb variability instead of transmitting it.
- And when you fix the information flow, something almost magical happens:

- The noise drops.
- The contradictions evaporate.
- The system stops shouting.
- The expedite list shrinks to a quiet, boring handful.

Not because the team is working harder,
but because flow is finally aligned with truth.
Manufacturing chaos isn’t a character-flaw in manufacturing.
- It’s a signal-flow design flaw.

Fix the signals, and everything else gets quieter.