DEMAND-DRIVEN SUPPLY CHAIN MANAGEMENT
How to transform the performance of your supply chain and become truly demand-driven
Today the vast majority of fast moving consumer goods, life-science and other manufacturing and distribution supply chains are being managed using a wholly ineffective supply chain planning process through very expensive Enterprise Requirements Planning / Material Requirements Planning (MRP) or Advanced Planning software systems.
That process uses forecasts of future demand to tell suppliers and factories what, when and how much to supply, make and move but, because
the production planning forecasts are always wrong the wrong quantities are sourced / made / shipped to the wrong places so stock levels are very poorly balanced and customers don’t get the service they want.
To try and avoid such problems these companies spend an inordinate amount of time expediting materials and products through their factories and supply chain which is very expensive, wastes huge amounts of capacity, cause stocks to be far higher than needed and, very often, fails to solve the service problem – and if it does the cost and cash flow implications are enormous.
“Demand-Driven SCM is a remarkably simple way of managing supply chains. The concept uses
actual demand instead of error-prone forecasts to drive replenishment through a de-coupled
supply chain, which is a genuine paradigm shift”
Simon Eagle, Associate Partner CAMELOT, evangelist
for Demand-Driven Supply Chain Management
UNDERSTANDING THE CONCEPT
Demand-Driven SCM simply involves positioning the right quantities of stock where they are needed up and down the supply chain and topping them up, as they are consumed, in a stable and repetitive sequence. In this way materials and products are pulled through the supply chain using a simple ‘make to replace’ and ‘ship to replace’ mechanism in line with actual demand without any need for expensive and disruptive intervention and expediting. And the great thing about Demand-Driven SCM is that it works with any demand pattern, even those with lots of promotional activity – bar those exceptional and highly extreme events that, instead, can be anticipated and managed with an advance stock build.
“I think that Demand-Driven SCM is powerful and practical. I hope that these ideas continue to gain traction in industry and that the concept of ‘demand-driven’ quickly becomes the norm.”
Martin Christopher, Emeritus Professor of Marketing & Logistics, Cranfield School of Management
UP TO 0% REDUCTIONS IN INVENTORIES
APPROX. 0% COST REDUCTION
UP TO 0% SHORTER PLANNING LEAD-TIMES
“This work will help cement the Demand-Driven methodology in the mainstream by dramatically strengthening the case for change with clear logic and common sense. Simon has been a huge advocate for the Demand-Driven movement and this book is a very welcome contribution to the body of knowledge!”
Carol Ptak and Chad Smith, co-founders of the Demand Driven Institute
Innovative planning concept
Increasing volatility and uncertainty on the demand side and complexity in global value chains – this is the new norm for businesses. Our Demand-Driven LEAN Supply Chain Management concept is as a response to these challenges.