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5 Steps Organizations Must Take to Reap the Full Benefits of a Demand-Driven Supply Chain

By Ed Elsbury June 21, 2019 by Ed Elsbury
Warehouse

There is a natural progression to reap the full benefits of a supply chain that is demand-driven, and it starts with optimizing the performance of your people, processes and SAP.  Is everyone working from one system of record and viewing the same set of information to make decisions? Or, are spreadsheets being utilized in many areas and therefore compromising the integrity of data to make real-time decisions?

The second step is ensuring the rules companies are using in their system accurately reflect how they operate as a business. When demand comes into the supply chain, do you have your rules set up in your system to best meet the demand? For example, if a company wants to stock products to meet demand, then do they have the right safety stock levels set, the correct material replenishment lead times, and the appropriate coverage profiles in place?

The third step is education. Have we educated our supply chain to manage by exception or do we find ourselves constantly in firefighting mode? To be an agile supply chain that is demand-driven, we need to reduce the noise that is in the system caused by bad data, bad processes and bad behaviors and get to a level of maturity where we are only addressing true supply exceptions like late vendor deliveries or unexpected demand.

The fourth step to reaping the full benefits of a demand-driven supply chain is the ability to work together, cross-functionally, to innovate and address demand challenges. High performing supply chains leverage their people, processes, and systems to meet and exceed customer demands and silos only slow down the ability to execute an end-to-end supply chain.

Finally, measure what matters to improve. Demand-driven supply chains need to measure operational KPIs including forecast accuracy (plan vs actual), OTIF, production schedule attainment, overdue demand and supply, vendor performance, delivery blocks, and customer satisfaction. Without KPIs to measure how the organization is performing, it is difficult to identify where the company is having breakdowns in performance.

The Key Benefits of a Mature Supply Chain

A supply chain-oriented organization — such as a manufacturer, distributor, wholesaler or asset-intensive company — with a high Business Maturity® rating, has proven its ability to use and leverage its SAP system’s capabilities to drive change and ongoing transformation to meet its evolving business goals. A mature supply chain realizes higher levels of business value from their people, processes and technology investments leading to reductions in working capital tied up in excess inventory, enhanced profitability, higher service levels, increased customer retention, and reduced operating costs. To raise its level of Business Maturity®, an organization must achieve faster response times to market fluctuations and align its people structures with its system structures. An integrated system equals an integrated organization that can muster the agility required to remain competitive.

How Companies Use Digitization and Real-Time Data to Stay Competitive in an Ever-Changing Landscape

Digitization helps connect processes and applications across multiple functional areas to sense and respond more quickly to customer needs and deliver value that is focused on outcomes. It changes how employees work by using intelligent technologies and reliable data to drive new levels of productivity and efficiency.

Real-time decision making requires trustworthy data and behaviors aligned with the rules we have set in our system (master data). When data is accurate, and our supply chain rules reflect reality, then supply chains can react very quickly to exceptions and demand changes. The ability of the supply chain to quickly react provides the organization with a competitive advantage in an ever-changing market.

Reveal transforms SAP-centric supply chain-driven businesses to run better. Our focus is to challenge the traditional thinking of the modern supply chain to ensure sustainable and successful businesses. We change the way people think and operate by revealing the hidden value in existing processes and deploying the smart use of technology. We combine wisdom, business smarts, technical expertise and artful precision to uncover exciting opportunities through our proprietary oVo® (ongoing VALUE optimization®) methodology. Companies work with Reveal because they want to optimize the value of their people, processes and the investments they have made in their SAP system. We help organizations achieve higher levels of efficiencies and profitability without additional investments in software.

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