Demand Driven Supply Chain Improvement

When you hear the term "demand-driven supply chain," what usually comes to mind is an auto manufacturing plant. This is because it is the most common example of a supply chain composed of active users. There are many types of supply chains, however, and they include not only automobile producers but chemical plants, hospitals, call centers, and others. In any case, demand planning involves detailed analysis of potential customers, their buying needs, and a plan developed to meet them.

Active demand planning includes defined tasks, goal setting, clearly stated goals, and regularly scheduled activities, all of which are designed to fulfill those goals. The true purpose of demand planning is the generation of a demand-driven supply chain, composed of many active users. The production of a product - or the processing of one - does not stop when the item is sold. It continues as long as there is demand for it. A supply chain based on demand driven processes provides the most efficient way of delivering finished goods and services to consumers.

Developing a plan to provide adequate supplies when needed is often a challenge for manufacturers. The planning process begins with identifying potential clients and their purchasing decisions. Then, the focus turns to the suppliers who will be involved in meeting those needs. Finally, the manufacturers must determine what, if anything, needs to be done to increase inventory levels as demand exceeds the ability to provide it.

An important part of the process of demand planning is identifying what, if anything, needs to be done to improve efficiency. In most cases, this involves an analysis of how sales, costs, and production can be improved. Improvements can involve everything from the design of marketing campaigns to the packaging of products. A supply chain that is heavily weighted toward demand is prone to experiencing supply delays that result in both lost sales and delayed delivery. Delays caused by demand-driven process improvements can result in lost profits and cause products to be sold beyond the capacity of the manufacturer.

Developing a comprehensive marketing strategy can also assist manufacturers in their efforts to meet demand. Marketing is just as much about creating a perception of need as it is about supplying the product itself. Once a firm develops a marketing plan, it can focus its efforts on developing the appropriate distribution channels. This includes making sure the appropriate channels for a particular product receive the highest priority during times of high demand and using other appropriate channels to make sure other items are obtained at a reasonable cost.

Creating a process for quality control is another area that can be improved by demand-driven improvement. Many manufacturers assume that the quality of their products is independent of demand. However, a firm needs to have a detailed understanding of the process by which its products are developed and manufactured. This process begins long before a product is actually produced. Manufacturers should develop a series of requirements that dictate each step in the manufacturing process.

These requirements should include a detailed description of the entire manufacturing process from start to finish, including materials used, steps to be taken throughout the process, the steps to be taken during each process, quality control standards to be adhered to, steps to be taken in case of problems during production or shipping, and any others. The description should also include a list of all of the employees involved in the process. Each employee should have a documented description of his role. This documentation will enable management to determine the quality of the product and identify shortcomings that can be corrected during production or shipping. Management should also include a list of quality control monitors used during the process.

The actions involved in the process should be documented in a separate document to facilitate future reference. The ultimate aim of the demand-driven supply chain improvement program is to eliminate waste. Companies that successfully manage their supply chains will not only be more efficient, but they will also be able to deliver to their customers on time. This will then provide them with an increased customer base, which will lead to increased sales and profits.

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