Supply chain spending shifts to demand management
Frontline Solutions has an article called “Supply Chain Spending Shifts to Demand Management” that highlights recent research done by AMR Research. As the title suggests, the research finds that manufacturers are focusing their spending on demand management.
This is very consistent with what we see. When we talk to customers the demand discussion revolves around demand planning (building the forecast) and demand management (accepting the forecast and dealing with the ever present changes that come right after you do). One large customer in Europe once said “we build a good forecast and then a good plan…then the phone rings.”
Traditional supply chain planning systems were built with the premise that you would have a set of assumptions, have a planner plug them in and it would produce the optimal plan for you based on those assumptions. This works fine in a static world, but in a world of high velocity change, this batch-oriented, sequential process breaks down quickly (I once had a Gartner analyst say “planning is only as good as your knowledge of your constraints. The problem is you don’t know about your constraints until they happen.”).
AMR is absolutely correct that a key to success today is being demand-driven (they offer an interesting diagnostic to see how demand-driven your organization is). A key to doing so is the ability to quickly empower all stakeholders with the information and tools they need to respond to frequent changes in demand. This requires an immediate understanding of the impact on supply, capacity and products and the ability to collaboratively figure out how to respond to drive actions that align with corporate objectives.
Getting the most accurate forecast is very important, but having a core competency in how to respond when its wrong or changes can really set you apart from the competition.
