Capacity: The right tools and team
Implementing a demand-driven supply chain requires time and resources to do it effectively. Companies must invest in tools and allocate resources to build the capabilities to effectively monitor demand and supply changes. With the amount of data being stored and transferred, it’s crucial to have the IT capacity to make sure the data is safe, accessible and timely. There are many tools—such as ERP, business intelligence (BI)and cloud computing—used today. Unfortunately, many are underutilized or used ineffectively. In many cases, companies invested in the tools but business process owners and business analysts are not trained to maximize the full potential of the tools. To achieve the capacity necessary and unleash the potential of a demand-driven supply chain, there must be alignment across employee roles and responsibilities, processes and technology. The key is a comprehensive set of requirements that form an integrated solution across the functions and suppliers. Business processes must be designed with clear hand-offs and control points that trigger actions and decisions. Once the capacity is in place, companies can leverage the demand-driven supply chain to its full potential.
Commitment: ensure buy-in at the executive level
Since there are a number of stakeholders involved in executing the demand-driven supply chain, it takes strong executive commitment to see it through to implementation. You can’t implement a demand-driven supply chain overnight and leadership must show discipline and patience while the processes mature and are adopted by the key players and suppliers. Those with critical roles will need executive champions to support their needs for resources, tools and the time required for coordination, communication and building the required capacity. It must be built into the overall business system and company culture to drive the desired behaviors. The demand-driven supply chain reaches beyond daily employee activities into strategic planning processes, organization design and employee incentives and rewards. In addition, S&OP meetings and supplier reviews take time. Leaders must be consistent and committed to the process. If the key players frequently miss meetings or fail to execute their responsibilities, the existence of the demand-driven supply chain will fade.
The characteristics of the demand-driven supply chain should sound familiar and are required to run a successful business today. However, in the context of a demand-driven supply chain, the characteristics align behaviors to ensure the organization is customer centric and maintains market relevance. A demand-driven supply chain functions a lot like vertical integration, though with its model, one avoids the substantial upfront investment but still reaps the benefits. In addition, you are positioned to proactively manage supply constraints quickly; effectively manage stakeholder expectations; and increase customer satisfaction.
In times like these, where uncertainty is around every corner, it’s paramount that you take every step at your disposal to continue your success. Operating a demand-driven supply chain can provide the competitive advantage necessary to meet your strategic goals in today’s complex environment.
Tony Mauro is a Senior Consultant with RAS & Associates. He has more than 12 years of consulting experience partnering with Fortune 500 organizations to improve their supply chain processes and capabilities.
George Davison, a Consultant with RAS & Associates, successfully managed large operational and data-driven projects in the finance, real estate, energy and aerospace and defense industries.