Demand chain management

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Demand Chain Management is the management of upstream and downstream relationships between suppliers and customers to deliver the best value to the customer at the least cost to the demand chain as a whole. The term demand chain management is used to denote the concept commonly referred to as supply chain management, however with special regard to the customer pull [1]. In that sense, demand chain management software tools bridge the gap between the customer relationship management and the supply chain management [2]. The organization’s supply chain processes are managed to deliver best value according to the demand of the customers. A study of the university in Wageningen (the Netherlands) sees DCM as an extension of supply chain management, due to its incorporation of the market orientation perspective on its concept[3].

Contents

[edit] Demand-Driven Supply Network

A Demand-Driven Supply Network (DDSN) is one method of supply chain management which involves building supply chains in response to demand signals. The main force of DDSN is that it is driven by customers demand. In comparison with the traditional supply chain, DDSN uses the pull technique. It gives DDSN market opportunities to share more information and to collaborate with others in the supply chain. This results that companies have a better view of customers demand.

DDSN uses a capability model that consist of four levels. The first level is Reacting, the second level is Anticipating, the third level is Collaborating and the last level is Orchestrating. The first two levels focus on the internal supply chain while the last two levels concentrate on external relations throughout the Extended Enterprise[4].

An important component of DDSN is DDM (“real-time” demand driven manufacturing). DDM gives customers the opportunity to say what they want, where and when.

Competitive advantages

To create sustainable competitive advantages with DDSN, companies have to do deal with three conditions: Alignment (create shared incentives), Agility (respond quickly to short-term change) and Adaptability (adjust design of the supply chain)[5].

Misconceptions

There are five common made misconceptions of demand driven (DDSN). Companies might think they are demand driven because they have a good forecast of their company; they have implemented lean manufacturing; they have great data on all their customers; they think it is a technology project and the corporate forecast is a demand visibility signal. Organizations need to recognize this and that they won’t make the same mistake [6].

have a better view of customers demand.

DDSN uses a capability model that consist of four levels. The first level is Reacting, the second level is Anticipating, the third level is Collaborating and the last level is Orchestrating. The first two levels focus on the internal supply chain while the last two levels concentrate on external relations [7].

An important component of DDSN is DDM (“real-time” demand driven manufacturing). DDM gives customers the opportunity to say what they want, where and when.

be aware of different implementations to realize DCM

  • DCM based on forecasts and plans

Some approaches combine business intelligence software and POS-data analysis to predict customers demand based on historical data. Highly sophisticated Forecast-systems try to generate better reorder data based on existing sales-data combined with other key factors like Holidays, Events (sports, Olympia, car races ..) to react on possible future customers demand.

  • DCM based on monitoring the reality

A different approach is to record every event related to stock changes like sales and replenishment in real time. Real time DCM can calculate sales trends on the fly and generate reorder signals our out-of-stock signals, and the best based on sales trends it is possible to generate warnings about near future out-of-stock situations on thy fly. If this signal raises early enough the supply chain can avoid the out-of-stock-situation.

The difference between both approaches is very clear:

  • Forecasts or planning systems are good to do better in future, but this approach doesn't show you the actual reality. It seems to be impossible to have real time forecasts for every shelve in every store all over the world.
  • Monitoring is perfect to avoid Out-of-Stock situations and enables to be proactive supporting your customers. These systems are much more adaptive to actual events/demands but this systems don't provide any forecasts.

The most perfect system might be set up if both approaches are implemented. Data of real time DCM helps to have much better historical data quality if OOS is avoided. The planning system can provide much better forecasts because of better data quality and this system might provide dynamic high/low watermarks for stock levels which are to be monitored by the real time DCM.

[edit] See also

[edit] References

  1. ^ Business forecasting, Demand planning, Inventory planning, Sales and operations planning, Sales forecasting software and services
  2. ^ QUANTOS SaRL - Demand Chain Management Solutions Take Hold With Selling Organizings, According To New Aberdeen Report
  3. ^ Abstract WU dissertation no. 4036
  4. ^ [4]
  5. ^ [5]
  6. ^ [6]
  7. ^ [4]

(4) Martin R, 2006, GMA and AMR Research, The Demand Driven Supply Network DDSN, Your Business Operating Strategy; 15

(5) Lee, H, 2004. The Triple –A Supply Chain. Harvard Business Review 82; 10 102-112

(6) Cecere, L., Hofman, D., Martin, R., Preslan L., The Handbook for Becoming Demand Driven, AMR Research, Juli 2005; 4

[edit] Literature

[edit] External links DCM-Software (forecast, planning)

[edit] External links real time DCM-Software (monitoring the shelve)

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