Every business needs a well-managed supply chain to be able to cope up with the advancements and competition in the business world today. It is even believed that a “Competitor that’s best at managing the supply chain is probably going to be the most successful competitor of all time” according to Owens, former CEO of Caterpillar. It means that the life of the company’s production process lies with its supply chain, and the latter’s management is as important as being the company’s life and core of success. Through the years, there have been a lot of economical shifts occurred that tremendously affected most of the businesses’ supply chains. But the principles of manufacturing and inventory control that famously helped some companies to rise to the top of their respective industries are no longer enough: companies must apply new technologies and sophisticated analytics not only to make their supply chains more responsive to their customer’s demand, but also make the most out of their resources at the least cost possible and with the highest profit possible.
On top of these economical happenings which creates problems for companies in their supply chain management, one solution to minimize this is through the Demand Driven Supply Chain (DDSC), wherein a system of coordinated technologies and processes that senses and reacts to real-time demand signals across a network of customers. Through this, companies can become more responsive to changing market conditions, minimize stock-outs and lost sales, maintain lower inventory levels, reduce cost and make better use of operating assets.
According to the third P on the marketing mix which is the “place”, it states that “the product must be at the right place at the right time to capitalize on its target market’s attention.” It also stated that “it involves making numerous decisions about how and where the product will be manufactured. And these decisions lead to on how many customers demand and how many will the store supply.” Product Promotion has also become an important decision to retailer’s which triggers the demand of a product. That is why demand driven supply chain has been created so these numerous decisions would be accurately managed.
The Kanban system was one of the factors that demand driven supply chain had. Henry Ford used JIT system after the recession on 1920 to cope up with the demands of his customers. Deming’s PDCA cycle can also be associated with the two of the six factors of DDSC. These two would be to Set-up the Right Technology Infrastructure, where the automation of key supply chain processes can help overcome behavioural roadblocks that impede DDSC improvements, and to Revisit Data Collection & Analysis, where the collected data will increase the degree of data granularity. These two goes similarly with Deming’s Plan, Do, Check and Act. Another that could be related to its factors would be the Rethink Operations, where companies should analyse their production capabilities and remove any obstacles that hinder agility, which is similar to Ishikawa’s diagram or the fishbone diagram since it both enumerated on how the problem of operation could be treated.
There is no guarantee success in the business world for what is in for today might not be in for tomorrow. Indeed there is a rapid advancement from time to time, and the need for a rapid coping is a must for companies to survive in the so called ‘corporate jungle’. As everything progress, the demand of consumers keeps on going. It is very important to keep everything coming and one way of maintaining this is through a well-managed supply chain. The Demand Driven Supply Chain is indeed helpful to keep everything going smoothly for business operations. That is why companies must put into value their supply chain and make use of every resources that they have to make everything possible. Supply chain is something that should not be taken for granted because the life of the production process lies upon it and it is as important as the business itself.
First Blog Collaboration with co-writers: J.H. Villanueva & R.Gappi