Global demand-driven supply networks, IT investments pay off in 2006
Schaumburg, IL, and Kansas City — October 14, 2005 — Yesterday at the 2005 APICS International Conference, an event for global operations management professionals, enterprise solutions provider Intentia released a statement predicting that 2006 will be the year that organizations make great strides in their effort to achieve lean supply chains that extend beyond the borders of the traditional enterprise.
The anticipated success will be driven by the widespread adoption of demand-driven supply networks (DDSNs) and the evolution of IT solutions developed to support global commerce, the company said.
In today's global marketplace, U.S. manufacturers have to compete and collaborate with the big international manufacturing hubs including China, India, Brazil and the Eastern Europe. Intentia commented that, to remain relevant, many manufacturers and their supply chain partners are actively building a DDSN to remain competitive by meeting customer demand for product variety, cost and availability.
"In the coming year, manufacturers that have made investments in open architecture will realize the benefits of a demand-driven supply network," said David Ross, Education Business Group manager of Intentia, CFPIM, and APICS-published author. "DDSNs are focused on orienting the entire supply chain for growth by designing supply chains that are focused around the needs and expectations of the customer. This can only occur when companies operate as lean as possible, deliver at peak efficiency, and possess agile technologies and organizational structures that permit them to effortlessly respond to market changes."
According to AMR Research's benchmarking studies in the consumer products industry, companies that excel at demand forecasting average 15 percent less inventory, 17 percent stronger perfect order fulfillment and 35 percent shorter cash-to-cash cycle times.
However, managing a global DDSN is complex due to the multiple languages, currencies and regulations required, Intentia said. Many manufacturers have turned to IT solutions to help navigate the maze and simplify demand forecasting within an international supply network.
"In the past, manufacturers primarily purchased IT-support tools to integrate internal processes, cut costs or gain efficiencies in speed. With these core operations in place, manufacturers are now looking to optimize broader operational functions such as demand forecasting and product lifecycle management," explained Ross. "This holistic view of the supply chain network is essential to adopting lean manufacturing. Organizations that want to achieve lean must look to add customer value-adding activities and eliminate waste in every business process."
For more information on demand-driven supply networks, read the In Depth article Overcoming Forecast Error with Real-time Forecasting.