Demand Driven Supply Chain: Characteristics &
Posted By: Supratik Ray, Principal Consultant,
Supply chains today are
becoming more complex as companies today expand their geographical footprint
and leverage outsourced manufacturing and operations. The consumers today on
the other hand have multiple choice of fulfilling the demand due to
increasingly similar product offering and penetration of multi-channel retail. The
changes in supply complexity and demand variations are transforming the traditional
forecast & push based supply chain to pull or demand driven. The key
characteristics of a supply chain driven by demand driven:
movement based on actual demand or consumption
visibility of demand & supply across the chain.
demand signal shared with all the tiers in the supply chain.
inventory at right stage and right quantity at right.
The benefits of a supply
chain driven by demand:
or eliminate stock out situations
safety stock and left overs / obsolescence.
stock and inventory cost
Demand Signal Repository: Foundation for demand driven
of the key enabler to a demand driven supply chain is removing information
latency across partners of the supply chain and having single view of the
supply and demand position. Demand signal repository (DSR) is the key enabler
is getting a harmonized view of data from external and internal systems. DSR is
an important building block of the demand driven supply chain and serves the
is a central database for all demand. It
stores demand from all sources like point of sale data, store &
distribution center inventory, retails forecasts & events.
internal line of business data like sales, shipments and forecasts along with
external data for analytics.
a multi-dimensional analytic model using data from 3rd party sources
like syndicated data, maps and other consumer information.
cross functional analytic tool to support business monitoring and pro-active
decision making for supply issues.
picture below illustrates the downstream data analysis and planning without
The picture below illustrates real time supply chain with DSR.
Demand Signal Repository: Benefits
advantages of DSR driven demand driven supply chain:
forecast accuracy by having demand & supply position in a single repository
and having a semi-real-time inputs for improving forecasting accuracy.
cash flow by reducing inventory. Right quantity and right place and right
promotional efficiency with integrated analytics for cross functional analysis
of promotional spend & performance.
time reduction for new product introduction due to availability of semi real-time
data for sales across retail channels and consumer response to promotions.
demand driven supply chain lots of benefit it also comes with its own set of
IT landscape across the supply chain and disparate usage of same data elements
by different partners.
of distributors and retailers in the supply chain to collaborate.
adherence to share data to have a compete view of the demand and supply
sponsorship to adopt and demand driven as culture rather than tool or
like consumer goods which have typically shorter product launch schedule;
strong regional channel preference and high demand variability have seen
improvement in improvement in forecast accuracy and improved insights for new
product introduction. Industries with long lead time or inventory at different
stages are able to make better decisions on reducing supply chain inventory.
there are challenges in orchestrating a demand driven supply chain many
industries are seeing the benefits and adopting DSR to achieve a demand driven supply
chain. The proliferation of information technology across the tiers of supply
chain, shortening product life cycles and multi-channel retail are going to increase
the adoption by retailers and manufacturer.