The growing need for demand management
Aberdeen has recently published new insights on the growing need for demand management (access the full report here - paid subscription required). Among the many good insights is the graphic above that shows the pressures forcing companies to focus on demand management.
These pressures, if not adequately managed, can impact both the top and bottom line performance of a company. This is increasingly the case, indicating the growing strategic nature of supply chain management and demand management capabilities within global manufacturers.
Customer expectations continue to increase while brand loyalty is weakening. Customers have more globally available options, can do more comparison shopping and have heightened expectations from their vendors/suppliers.
These pressures collectively are having companies look at strategies to become more demand-driven. For years manufacturers have focused their energies around building the best plans possible and then seeking execution efficiency. This meant building optimal plans and automating processes to streamline execution and require little to no human intervention. This made sense as the focus was a push-oriented model where there was greater control over supply management, capacity, production and the like. But the new competitive requirement is to become demand-driven, and the old way of working is no longer sufficient.
In a demand-driven world, companies have to come to grip with the fact that you can’t plan the customer. The processes, tools and expertise the company had around the push-model are ill-equipped for the pull-model required to become demand-driven. Said another way, what got you to a market leadership position in the 20th century is likely not enough alone to keep you there in the 21st century. In a demand-driven world, there are an increasing number of high visibility judgment calls that need to be made every day to deal with the deviations to the plan. This could be an important customer calling with a request to increase their order and wanting to know, now, if you can do it or not. It could be an unexpected supply disruption that requires an immediate reallocation to meet demand requirements. These issues require people to act and react in a timely and accurate way. The dynamics of the response process are, in many ways, completely the opposite of the traditional planning process.
Empowering people to act is paramount. Front-line decision makers need visibility, tools to collaborate and figure out the impact of accepting the change, to see, analyze and simulate alternative resolutions before pulling the trigger on a major tradeoff.
The dynamics have changed - have you?
