Beyond the Shop Floor: Why Demand Management Fuels Supply Chain Success
Achieving the goal of transaction excellence too often comes down to how well we do at demand management. But too many of us still believe that demand management excellence begins and ends on the shop floor.
That kind of thinking leads to interruptions in the line of sight and forces us to make decisions in an environment in which some of the factor are obscured. If we don’t know what is truly going on up and down the supply chain, we risk a significant visibility gap, which impacts sourcing and production and increases the likelihood of disruptions at every turn.
The first thing we must keep in mind is that the supply chain is a horizontal process that flows from end-to-end. A supply chain works best when everyone knows their place within one system of record and are all working seamlessly from the same data. At that magical moment, a supply chain becomes truly agile—possessing the right data, processes and human capital to make small and rapid adjustments to meet different outcomes.
Unfortunately, too many of us inadvertently sabotage the end-to-end flow that leads to agility and responsiveness. Certainly, we understand the urgency of seeking out and negotiating with valued suppliers, running our RFPs, getting our sales orders into the supply chain as quickly as possible and sharing that information with all stakeholders. We know that when the actual product amount aligns with the projected demand and everyone is doing their job, we have achieved transactional exercise.
Yet time and time again, we leave the shop floor in the dark by continuing to rely on siloed data, thereby creating a lag in letting the system know when orders are actually entered. Without a single system of record—SAP—and the proverbial green light that shines up and down the supply chain, we are unable to quickly respond to demand with flexibility, innovation and velocity.
Now, what if we took a leap of faith and established end-to-end integration, merging our strategic business plan with our tactical supply plan? What if we got sales orders in, then went directly to forecasting, and made sure that we were operating as close to reality as possible?
That would be as close to utopia as it gets. Knowing what we are going to make, realizing that materials will be available, feeling secure that our work center is primed and ready and we can produce on time and in full, is the ideal we all strive for.
To achieve that objective, we must realize that SAP won’t work for us unless we work with it. We must be willing to make ample use of exception management and capacity planning and be sure we are living in the line of sight up and down the supply chain. At that point, many good things begin to happen. MRP begins to run more efficiently and exception management and capacity planning is firmly in place.
The question again arises: how well does your organization do at demand management? Once we understand the demand management, apply the right planning strategies within the integrated supply chain to the right materials, and establish the foundational business rules for effective managing and scheduling, we are on our way. We are living in a clear line of sight, which can only be accomplished through transactional excellence and a single source of record and we are finally proficient at the alignment of demand & supply planning.
Take a deeper dive into achieving transaction excellence by reading this white paper "Living in the Line of Sight Aiming for Transactional Excellence".
