Demand Driven Supply Chain Concepts

Before defining the DDSC concept, it is very important to review the concept of Supply Chain Management, as it will serve as the foundation to build the DDSC concept. To that end, the Council of Supply Chain Management Professionals (CSCMP 2009) defines Supply Chain Management as follow  

Based on this definition, it can be pointed out two key concepts respraisible for the success of Supply Chain Management initiatives in manufacturing and service companies Supply Management and Demand Management. 

Bayraktar et al. (2009) also ctMifirm the importance of demand management They tested a framework identifying the causal links among supply chain management 

On the other hand, the supply chain is also operational, because the end-to-end supply chain concept has to work in practice, and this is all about getting supply chain thinking and skill-sets into every level of management and supervision, and into execution in every business function, in every player in the value chain. The drive for change needs to come from the top senior management, and the leadership of change to convert supply chain thinking into operational practice, must be taken up as a boardroom responsibility. 

Hull (2005) states that in a demand driven chain, a customer activates flow by ordering from the retailer, who reorders from the wholesaler, who reorder from the manufacturer, who reorder raw materials from the suppliers. Orders flow backward, up the chain, in this structure. The activator can be either actual customer demand as shown in Fig. 2.1, or forecasted customer demand. 

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A structured and integrated framework companies can use to assess their supply chain in light of Demand Driven Supply Chain concepts. 

He proposes a three-phase roadmap to implement the Demand-Driven Supply Chain concept. The phases are listed and also illustrated in Fig. 2.6 ... 

They presented a reference model for designing business processes in demand-driven fruit supply chains. The model consists of a reference modeling framework that defines process models at different levels of abstraction and includes a method of how they can be composed from a repository of building blocks. However, they did not provide any structured assessment approach to evaluate different business segments/industries in light of demand driven supply chain concepts. 

In this book, it is proposed to define the components of DDSC, then develop a structured methodology that will help companies assess their current state in light of demand driven supply chain concepts and identify their current strengths and gaps, and therefore, define a strategic plan to evolve and become more efficient and competitive. 

These characteristics of theory building from case study seem to fit well with the proposed problem stated in this book as the main objective is to develop a framework for assessing and guiding companies progress towards a Demand Driven Supply Chain concept, which is not clearly defined yet in the academic literature and not fully executed in practice by supply chain professionals. 

Four different countries were preselected to review the proposed maturity model and answer the assessment to identify current and future states based on demand driven supply chain concepts. In this way, it wiU be possible to validate the proposed maturity model at the same time that companies current and future states are identified. The main criteria to select the countries were their market maturity, interviewees supply chain practical experience, and author s knowledge of their operations. 

Ayers (2006) provides a roadmap to implement demand driven supply chain concepts in the manufacturing area, which is illustrated in Fig. 4.19. 

In this book, a framework was also developed to allow companies to assess their current state in light of demand driven supply chain concepts, and identify the desired future state in a 1 year horizon. The framework was applied to three supply chain operations of a CPG company in different countries as part of the methodology evaluation. Results indicated that one operation is currently close to an optimized push operation (level 2 out of 5), and the other two operations are close to a basic push operation (level 1 out of 5), revealing that there are clear opportunities to implement the demand driven supply chain concepts to move towards a more customer centric operation. 

Finally, this book contributed towards a better understanding of the demand driven supply chain concepts and how to effectively implement those concepts in a real supply chain environment. 

The authors recommend forsaking their traditional forecasting as if they were dealing with independent demand. In place of this, they would utilize end-user sales for their production decisions and communicate it throughout the chain, an application of the demand-driven supply chain concept. They note one obstacle is that the source of the information, the retailer, has the least amount of safety stock — only 10 percent. So it has that much less motivation to participate. The upstream inventory, and its cost, is invisible. 

A detailed and robust description of the concepts and components that makeup a Demand Driven Supply Chain. 

This chapter reviews the concepts of Demand Driven Supply Chain and the methodologies for assessing companies in light of DDSC cmicepts currently available in the academic literature, and finally, provides a summary of the operational and financial benefits of moving towards a DDSC. 

After applying the framework in practice and based on the feedback received from supply chain directors, the maturity model and the proposed approach will be reviewed if needed, to make any necessary adjustment or changes, in order to better reflect the concepts of demand driven supply chain. 

This book aims to identify and describe the key components of demand driven supply chains, and based on these components, develop a structured and integrated assessment framework that companies can use to assess their current and desired future supply chain states in light of the Demand Driven Supply Chain (DDSC) concepts, and to define a supply chain strategy to move towards a customer centric operation, cost effectively. 

In this section, we review some of the foundation concepts and practices that will help the demand-driven supply chain to become a reality. Some are shown in Figure 28.6. Organizations, including both product and service producers, will find value here for upgrading SCM practices. 

Table 26.1 summarizes the concepts we will discuss. These are also shown in Figure 26.6 at the point in the process where they will likely play a role. We begin by describing a methodology that captures the "as-is" with respect to time in the supply chain. This piece of analysis is a foundation for picking the right approaches to successfully make the transition to the demand-driven supply chain. 

Throughout the economic downturn, companies one by one gained a deeper understanding that the reliable supply chain was not sufficient. As a result, the demand-driven concepts gained greater adoption in the building of a resilient supply chain. 

Traditional view of supply chain excellence. For demand-driven initiatives to be successful, they must extend from the customers customer to the supplier s supplier. The concepts of demand latency, demand sensing, demand shaping, demand translation, and demand orchestration are not widely understood. As a result, they require education and a business champion. Organizations not familiar with the concepts will not understand why the demand management processes need to change. 

Each technique is important, but they are not equally important for all supply chains. There needs to be a choice. While all are great concepts to drive manufacturing improvements, the question is. How to put them together And how do they fit within the road map to build a market-driven value network Should companies use these techniques to redefine manufacturing to be more responsive to both buy- and sell-side market demands The answer lies in understanding the rhythms and cycles of the supply chain and using these techniques to design the appropriate supply response. 

Supply chain excellence has evolved. The definition has morphed from the efficient supply chain to a market-driven value network. Today, the concept of a market-driven value network is largely aspirational. It is a new goal. As supply risks and costs have grown, companies realize that a demand-driven approach is not sufficient. The focus needs to be about more than the channel, instead, the supply chain needs to be driven through strong horizontal processes bidirectionally from market to market. Accomplishing the goal requires a redefinition of both buy-side and sell-side processes, and the use of new forms of analytics to sense, shape, and orchestrate bidirectionally market to market. 

Ayers and Malmberg (2002) touch very briefly DDSC concepts, providing a four stage maturity model to show how enablers of supply chain improvement support the introduction of information technology to the supply chain, and one of these elements is the demand-driven as illustrated in Fig. 2.8 below. However, they did not provide a detail maturity model and a robust methodology to assess a supply chain, in order to determine its current state in terms of the demand driven concepts. 

In this level, the organization has not only implemented the demand driven concepts internally, but also expands them to the whole supply chain where it operates, and experienced proven financial and service improvements. 

The framework presented in this book was applied in different supply chain operations of a global CPG company to validate the methodology and formalize an action plan for these operations to be able to move towards a DDSC. The results of the assessment showed that two operations are currently close to a basic push level, and one is closed to an optimized push level, confirming that there are clear opportunities for those companies to improve their performance based on demand driven concepts. 

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