Scottsdale, Az—Dec. 14, 2011—Demand variability, globalization, escalating customer expectations and new product introduction are key challenges companies face in reliably delivering on their business plans. These challenges lead to increased complexity and variability, which—if not managed effectively—lead to value leakage in terms of lost sales, higher costs, and lower asset throughput.
To help companies achieve maximum value for their customers and their enterprise, JDA Software Group, Inc. The supply chain company recommends manufacturers focus on four key strategies in 2012.
Segment for profitable and reliable customer relationships: Segmentation is the means by which companies create one-to-one profitable relationships between their customers and their supply chain. This means creating different supply chain response models for different product-customer intersections.
Many companies still operate one-size-fits-all supply chains in which some customers are under-served while others are over-served. This is no longer competitive and companies should deploy customer-differentiated policies throughout their supply chains from demand through supply.
Drive your supply chain from real demand: Driving the supply chain from real demand means understanding independent (real) demand and managing supply chain operations from this single view of demand. Real demand is typically downstream of most manufacturers. In most cases, manufacturers drive their supply chains from dependent demand, which comes in various forms, including forecasts and replenishment orders. This dependent demand has been distorted at various points along the value chain through separate forecasting and replenishment processes and metrics. These distortions result in the well-known bull-whip effect.
Synchronize and provide visibility: Visibility is a critical foundational component of effective supply chain management. This means having a global view of demand and supply across an adequate number of months necessary for strategic, tactical, and operational decision making. Furthermore, there is a need for continuous, always-on visibility to changes in demand and supply. These changes provide foundational insight into threats to the company’s plan for making money. “Synchronize” means integrating high level business planning with operations along the north-south axis and demand with supply along the east-west axis. The orchestra leader for this synchronization is the sales and operations planning process, coupled with a feedback loop based on continuous always-on visibility of demand and supply.
Optimize the use of resources: Resources come in the form of production capacities, inventory, warehouses, trucks and other transportation equipment and people. Maximizing throughput across these resources is critical to success. Sophisticated technologies to optimize the use of these resources are more accessible than ever. Exponential growth in computer processing speed and memory, along with improvements in usability, data management, and integration has accelerated time-to-value and broadened the scope for which these technologies can be applied. Companies can now drive this optimization across functional boundaries from business planning through execution and from customer through supplier. The deployment and continuous improvement of these technologies is more important than ever and a foundation of creating a profitable, and reliable agile supply chain.
“In 2012, these four key strategies form the foundation for addressing the complexities brought on by increasing demand variability, globalization, escalating customer expectations and new product introduction,” said Kelly Thomas, senior vice president, manufacturing, JDA. “By implementing these strategies, companies can be reliable in serving their customers, agile in addressing continuously changing demand and supply, and profitable for their shareholders.”