An inefficient and poorly functioning supply chain can negatively impact every aspect of an organization. Here are six trends that will help you re-evaluate current processes and performance
As companies increasingly use their supply chain to compete and gain market share, spending and activity in this area are notably on the up-swing. Technology and process upgrades at forward-thinking companies clearly show that supply chain excellence is more widely accepted as an element of overall business strategy, and that increasing value to customers is not just management's, but everyone's, business.
The shift in how companies view their supply chain is taking hold. Examine how your company views its supply chain and consider your answers to these basic questions.
Does leadership view your supply chain as a strategic competitive advantage? If not, are you considering outsourcing your supply chain?
Are the capacity strengths of your supply chain commonly known and understood by company leadership? If so, how do they manage impact growth, profitability and customer service?
The following are six key trends causing significant impact and change to supply chain design and performance:
Trend 1 — Demand Planning Begins at the End of the Cycle
As sources and capacities for manufacturing have increased, more companies have moved away from focusing efforts on plant-level production planning and are adopting more of a demand-driven focus of trying to influence and manage demand more efficiently. Rationalizing what your company is best at selling, making and delivering, and aligning the sales force with that mindset, is critical to adopting a demand-driven model. The demand driven approach can help a company create a more customer-focused mindset, without sacrificing operational efficiency. Ultimately, a demand-focused approach to planning can significantly improve demand planning and management efforts and help overall costs and customer service efforts.
Advanced demand planning systems and proper strategies can also help uncover data and identify trends buried in a company's information systems. Companies should conduct an enterprise-wide internal Demand Review to gather information from all aspects of the organization. Goals are then set to gain consensus on what will be sold each month for each product line or category and the resulting revenue. Of course, the driver of the Demand Review process is continuous improvement of forecast accuracy.
Critical to the success of any Demand Plan is having all stakeholders, including sales, marketing, finance, product development and supply chain agree upon a consensus Demand Plan. It's important for all participants to discuss factors affecting customer demand patterns (such as new or deleted products, competitors or market conditions), the aggregate demand plans and associated revenue plans. Once all demand for products and services has been recognized, the information is consolidated into one Demand Plan.
Demand planning is a key input to the larger sales and operations planning (S&OP) process and can have a significant positive impact on new product introductions, inventory planning and management, customer service, supply planning efficiency and sourcing strategies. Demand planning success is often tied to organizational structure. Companies with dedicated resources focused around demand planning and forecasting yield stronger results and drive more value to their company. Organizations that focus part-time on demand planning and forecasting efforts, however, often yield sub-standard results. With the strategic importance of demand planning, companies need to be committed to this from both a resource and technology perspective.
Trend 2 — Globalization