Supply chain demand driven flow

The characteristics of forward and reverse supply chains differ in many aspects (Visich et al. 2005). A forward supply chain has a demand-driven flow... 

Evolution to a demand-driven supply chain will likely proceed in the order proposed above. Shortening the lead-time is fundamental to changing batch model economics. Basing decisions on demand comes after adopting the economics of the flow model. Along the path, there is feedback to earlier steps. For each phase in Fig. 2.6 above there are three to four methodologies to be applied towards a DDSC operation. 

In this book, it is reviewed the current market and business environment and highlighted the importance of companies become demand driven instead of production driven based on the contingency approach. In a demand driven supply chain, customers activate the replenishment flow and the organization is structured and prepared to sense and respond to real time demand across the supply chain, which should include customers and suppliers. 

Forecasting in the flow would be simpler as well. One need only forecast and plan to a likely range for production. Supply chain partners then put in place the capability in terms of plant, equipment, and staffing to produce to that range. There is also a reduced need to forecast individual items, as supply chain production is determined by actual sales. We refer to this supply chain as a demand-driven supply chain, as discussed in the next subsection. 

Order penetration point The point in a product s flow when an item is earmarked for a particular customer. Downstream processes are driven by customer orders upstream processes are driven by forecasts and plans. However, the plans themselves can reflect actual customer orders in a demand-driven supply chain. (Adapted from APICS Dictionary, lOtb edition )... 

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