Current CAMELOT study examines supply chains in industrial manufacturing
Mannheim, May 24th, 2017 – More than 95 percent of manufacturing companies are having difficulties adhering to delivery dates as well as with delivery flexibility. More often than not, this is due to old material requirements planning (MRP) systems designed for exact demand forecasts. Precise demand forecasting no longer works in today’s complex, volatile markets. The consequences are stock levels that are too high or too low, high costs, excessive production, and massive delivery problems, resulting in dissatisfied customers. Decision-makers in the manufacturing industry are hoping for improvements thanks to a new supply chain planning concept called Demand-Driven Supply Chain Management (DDSCM), which is based on actual demand rather than demand forecasts. When implemented consistently, it allows goods to be delivered on time in 99 percent of cases – while reducing stock levels. This is the first time there has been a solution to the traditional target conflict between maximum customer service and minimum stock levels. These are the results of the current study “Time for a Paradigm Shift in Supply Chain Management” by the consulting specialist CAMELOT Management Consultants.
Major dissatisfaction with supply chain planning
According to the CAMELOT survey of 150 top managers in the industrial manufacturing industry in Germany, 97 percent of the companies are not satisfied with traditional supply chain planning concepts. More than half (58 percent) of those surveyed already implement individual elements of the new demand-driven planning approach. The delivery capability of these companies is significantly better than that of their competitors. “Although some companies have already implemented certain Demand-Driven SCM methods, many aspects remain unknown and therefore unused. This means that there is still enormous potential,” says Dr. Josef Packowski, Managing Partner at CAMELOT, about the study results.
New concept solves old problems
The study showed that companies can significantly improve their delivery capability by universally implementing DDSCM, thereby fulfilling customer demands up to 99 percent of the time. Stock levels can be reduced by up to 50 percent, thereby reducing costs by up to 20 percent. Furthermore, the time required for planning would also be reduced by up to 85 percent. “In order for companies to benefit from these advantages, DDSCM must be consistently implemented throughout every stage,” explains Volker Roelofsen, Partner Industrial Manufacturing at CAMELOT. This includes strategically positioning inventories (decoupled from the supply chain), measuring reserves and adjusting them dynamically, and implementing demand-driven planning as well as transparent, accessible stocks.
Not only does bringing the supply chain into alignment with actual customer demand solve existing manufacturing challenges. It also creates significant value-added potential. Furthermore, it is an essential prerequisite for digitalization and other initiatives that ensure the survival of manufacturing companies.
You can order the complete study free of charge at www.camelot-mc.com.