Why a paradigm shift in SCM is necessary to become truly demand driven
Demand-Driven SCM is a remarkably simple way of managing supply chains.
E2E Supply Chain Organization
The rationale for Demand-Driven SCM is based on what supply chains really are: flows of materials through several conversion processes that are prone to develop into inventory queues and time delays whenever there is variability.
Forecast errors are the greatest source of this supply chain variability but in today’s complex and volatile markets, attempts at significantly improving forecast accuracy are doomed to expensive failure.
The right Thoughtware is key
The Demand-Driven SCM concept therefore uses actual demand instead of error-prone forecasts to drive replenishment through a de-coupled supply chain, which is a genuine paradigm shift
Demand-Driven SCM involves
Positioning independent inventory locations, or buffers, within your supply chain to de-couple your value add activities and prevent the transmission and amplification of natural process variability
Sizing and maintaining the inventory buffers in line with average demand and known variability over the lead-time – which means the aggregate inventory is always ‘right sized’.
Replenishing every stock position with its own optimal sequence and cycle in line with ex-stock consumption or demand (or “make to replace” and “ship to replace”) which enables the supply chain to autonomously respond to demand without requiring the unplanned service saving schedule amendments caused by inaccurate forecasting.
And using exceptional advanced stock builds for extreme, but planned, demand or supply events such as TV advertising campaigns, seasonality and factory shut downs.
Change Management & Thoughtware
Demand-Driven SCM, despite its simplicity and effectiveness, requires a management program designed to win both hearts and minds by helping everyone in the company to experience the benefits and fully understand the new ways of working. Read more
The use of demand volume and variability analysis to support selection of the most appropriate replenishment technique.
The use of performance measures and KPIs that support flow centric behaviours that result in maximised end-to-end performance: service, revenue, inventory and efficiency. Read more
Demand-Driven Software Solutions
Demand-Driven SCM is appropriate for implementation across the entire end-to-end supply chain no matter how complex, global or extended. This inevitably implies the use of functionality rich software that can support the piloting and implementation of the Demand-Driven SCM process across geographically dispersed, but connected, locations. Read more
The Demand-Driven Adaptive Enterprise
Is the culmination of full implementation of all components of Demand-Driven SCM. The Demand-Driven Adaptive Enterprise (DDAE) Model spans the operational, tactical and strategic ranges of an organization allowing it to continuously and successfully adapt to the complex and volatile supply chains we see today.
For the Demand-Driven Adaptive Enterprise world, CAMELOT Group provides a unique end-to-end portfolio of services from strategy development to system implementation – through two specialized firms: CAMELOT Management Consultants contributes to Demand-Driven thought leadership, strategy, organizational and process consulting whereas Camelot ITLab division complements this offering by a DDSCM compliant and SAP certified software solution.
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