Today’s macro economy remains uncertain, with high unemployment, considerable debt, volatile markets, and high environmental impact.
In addition, consumer expectations are changing more quickly than ever, and product lifecycles continue to shorten.
Companies can remain competitive and battle uncertainty by addressing the volatility through a demand-driven supply chain.
This approach focuses on the market and consumers for planning, processing, production, and operational circularity.
It augments the traditional forecasting process by creating a sense and response environment to enable a company to quickly adjust ordering, production, shipping, and supply chain emissions to match the demand.
The network size can vary from a collaborative effort between your company, suppliers, and customers to an internal approach where coordination within your circular business model is the pipeline for supply chain excellence.
There are tangible and intangible benefits of operating a demand-driven supply chain, such as greater market share and increased revenue by maintaining relevance with your customers through a constant feedback loop, improved product development, cost avoidance with product-as-a-service models, and free cash flow by reducing inventory and managing shortages.
Intangible benefits include engaged employees and suppliers working in a permissionless, private blockchain network rather than creating barriers from misaligned objectives.
Regardless of how you approach the demand-driven supply chain, there are four vital characteristics that executives must demonstrate and implement to successfully incorporate the processes into the organization: coordination, communication, capacity, and circularity.
Coordination: Together For The Goals
Signals for demand changes can originate in several places and significantly impact the entire value chain.
Implementing a demand-driven supply chain requires a coordinated effort for all actors to respond accordingly and promptly make adjustments.
A shared logistics model allows companies within the same network to react simultaneously and take advantage of ever-evolving conditions, reducing costs at the same time because the product delivery flow is always externalized.
Entering a private blockchain network, developing industry partnerships, and establishing a coordinated internal&external approach encourages customers and suppliers to share proactively, secure relevant information, and work together to respond quickly to market shifts.
In addition, the collaborative-operation approach encourages suppliers to offer innovative solutions to address the unpredictability of sharing the risks and benefits.
Supplier engagement and performance management programs should be established to include focused communication channels and measures within the demand-driven supply chain.
Internal cross-functional communication and information sharing are important to ensure that the leaders within each function prioritize their objectives to respond to market changes.
Coordination does not just happen. It requires preparation, organization, and simulations to establish key metrics and business process owners that understand their roles in the overall demand-driven supply chain.
Communication: The Key To Growth
The demand-driven supply chain requires responsiveness and agility. Communication channels must be established to ensure demand signals and breaks within the supply flow.
Companies can mobilize quickly to demand transformations in today’s global economy and digital age. Business analysts can spread key results to a large number of stakeholders fast.
However, there is also a balance between established weekly, monthly, and quarterly results-sharing to ensure the right players are involved, the required information is presented with the right context, and allow the proper evaluation and collaboration across all parties.
A good mix of formal communication processes, protocols, and a balanced ratio between actions and responses are required for responding to demand and supply shifts.
The information must flow across the network through permission levels, ranks, and rating scores to ensure alignment of activities and tasks with shifts in the priority objectives.
Capacity: Required Tools, The Right People
Implementing a demand-driven supply chain requires time and resources to do it effectively. Companies must invest in tools, allocate resources, and incorporate new technologies like blockchain to build the capabilities to monitor demand and supply changes effectively.
With the amount of data being stored and transferred, it’s crucial to have the capacity to ensure the data is secure, accessible, and convenient.
Companies often invest in the tools, but business process owners and analysts must be prepared to maximize the tools' full potential.
There must be alignment across employee roles and responsibilities, processes, and technology to achieve the capacity necessary and unleash the possibility of a demand-driven supply chain.
The key is a comprehensive set of standard requirements that form an integrated solution across the functions and suppliers. Business processes must be designed with clear hand-offs and control points that trigger actions and decisions.
Circularity: Low Impact at Each Stage
In a demand-driven supply chain, there's a need to map a framework for catalyzing technology-based solutions and actions on sustainable production and consumption to identify key points of intervention within the network to reduce natural resource use and environmental impacts.
This approach anchors the supply chain’s impact on the socioeconomic reality by drawing on diverse bodies of knowledge and innovation.
Unlike the linear supply chain model, adopting a circular model helps reduce the environmental impact and your long-term costs.
The circular business model helps decrease costs as you reuse the raw materials you paid for, allowing you to maximize profit.
Rather than throwing a product away when consumers no longer want it or when its life cycle has ended, the product can be transformed into a new one with a lower production cost.
Furthermore, a circular supply chain can help businesses combat the price volatility of certain raw materials. Price volatility in linear supply chains often leads to problems in budget planning and keeping long-term costs low.
However, it is easier to plan for budget and expenses with a circular business model as you can anticipate the quantity of reused and recycled materials needed when manufacturing new products.
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