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Pandemic calls for supply chains with FLOW stabilizers

New CAMELOT study examines trends in supply chain management

Mannheim, 01/26/2021 – Against the background of the coronavirus pandemic, supply chain managers consider agility, with shorter lead times and stability of supply, to be the biggest challenge facing them at the moment. In fact, most supply chains have proved to be largely unprotected and vulnerable in the current exceptional circumstances. Supply chain managers see one answer to these challenges in the reconfiguration of their supply chains according to the principle of “Demand-Driven Supply Chain Management (DDSCM),” equipping the supply chain with active FLOW stabilizers and thus making it more resilient. Around half of those surveyed have already produced a plan for implementing this supply chain management concept or are preparing such a plan.

This was revealed by the current “Demand-Driven Radar” study, which has been conducted regularly by CAMELOT Management Consultants since 2018. In view of the increasing disruptions in globally integrated supply chains and the “supernova” event of the coronavirus pandemic, companies need to rethink their procedures and create more resilient supply chains. “As Covid-19 has clearly shown, no single concept can protect against unexpected events. Using Demand-Driven Supply Chain models, equipping supply chains with FLOW stabilizers and dynamic information-flow buffers, companies can incorporate shock absorbers into their supply chains in a controlled and very effective manner,” says Dr. Josef Packowski, Managing Partner at CAMELOT, commenting on the results of the study.

Stabilizers to smooth demand fluctuations

Demand-Driven Supply Chain Management is the process of controlling supply chains according to the strict principle of differentiating the information flow in the supply chain into two independent tiers. In the first tier, only inventories and capacities are defined and configured on the basis of forecasts. The second tier covers the use of the preconfigured inventories and capacities, based on actual customer orders. At this point, a stabilizing net flow control (DDMRP) is applied, which acts as a FLOW stabilizer against demand fluctuations.

Implementation challenges

However, for companies this means a paradigm shift, which brings with it a number of challenges. For the supply chain managers who took part in the survey, these include above all the adaptation of IT systems currently in use, support from top management, practical implementation with regard to employees and employees’ skills, as well as change management.

In spite of these challenges, 48% of the companies surveyed, regardless of their size, are already integrating Demand-Driven concepts into their implementation plans or plan to do so in the next year. The managers taking part in the study expect above all to achieve agile and flexible supply chains, as well as reduced inventories and improved lead times.

Experts and executives from supply chain management and top management of global corporations and medium-sized companies in various industries were interviewed for the study. The results of this study can be downloaded free of charge from www.camelot-mc.com.

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