Today’s business world is more complex than ever before. Factors such as technological advances are causing drastic shifts in consumer behavior. It has a significant impact on businesses across all industries. Unlike the supply chain of the past, now supply chains are diverse, complex, and ever-changing. However, previous supply chains were static, one-dimensional, and sequential.
To keep pace with this global trend, Supply chain people need to make decisions strictly in line with market dynamics to achieve their business objectives.
As the name shows, Demand driven supply chain planning is solely concerned with constructing supply chains in response to demand trends. The drawback of not aligning your policies with this method mainly is a great fluctuation in production levels. You will be left with either short of supply or have a surplus. Inventory levels can fluctuate, making the process inefficient and costly for all concerned parties. Both situations are not suitable for your supply chain.
The concepts of Demand-Driven Supply Chain Management (DDSCM) and Demand-Driven MRP (DDMRP) completely transformed the supply chain management landscape, enabling businesses to reap significant benefits.
Benefits of Demand-Driven Supply Chain
Demand-driven supply chains are highly complex networks with various actors with various business process assignments and control and coordination modes. It brings many benefits to your business, some are listed below,
Reducing information delays:
Since information is the key factor, better forecasting can make wonders for your business. In DDMRP you purchase as per demand trend. Therefore, you keep less inventory. So, there is less confusion, and a true picture of demand and supply eliminates disruptions.
Increase Service Level:
On average, businesses experience an improvement in service level after introducing Demand-Driven Supply Chain Management. It significantly increased the supply chain efficiency. The more an organization progresses down the road to becoming a Demand-Driven Adaptive Enterprise, the more extensive and strategic the advantages that can be realized at each stage will become.
Customer Satisfaction: Customers using online and mobile buying is more integrated and educated than ever before. They can shop online at any time and from any place. They have access to an endless amount of knowledge. Achieving a high level of customer satisfaction is an optimum goal of every business, which can be only ensured when you provide what customer demands with best customer service.
Today’s customer demands are evolving like never before, wanting more and more options with free delivery and an easy return policy. If any business gets to meet these expectations, customers would be satisfied and loyal to your company.
Balanced Cash-Flow
If you employ Demand Supply Chain Planning for your business, you’ll almost certainly see a rise in revenue and lower operating costs. Digitization lowers operational costs and allows for exception-based planning.
Managing Uncertainties
DDMRP is a wonderful strategy that focuses on Real-Time supply chain uncertainties, rather than forecasting. Because of its dynamic nature, the business must fundamentally rethink its planning and execution processes. Companies will greatly benefit from this principle because main performance metrics will dramatically improve.
Provide Flexibility
The flexibility of the Demand Driven Supply Chain accommodates evolving customer needs. It not only establishes a smooth warehouse contact but also allows real-time adaptation to changing market trends. Contrary to earlier supply chain approaches, demand-driven markets are more elastic.
Why is it important to be demand-driven?
Supply chain management is focused on reacting to customer and market signals in demand-driven supply networks. To be demand-driven, the conventional supply chain must be operated as a fully interconnected supply network, with visibility and notification of changes in consumer behavior for all levels.
To become demand-driven, the aim is to remove uncertainty. Essentially, you must understand all of the supply chain’s functionalities and incorporate this data into a scalable supply chain.
Summing Up,
While more companies strive to improve the quality of their operations and their ability to meet customers’ demands, their supply chains are becoming increasingly important. Faster response times can help supply chains deal with demand volatility. Demand-driven supply chains are highly complex networks with various actors with various business process assignments and control and coordination modes. Companies must be able to participate in several supply chain arrangements at the same time, as well as quickly migrate to new and the best ones.
