Inbound Logistics | July 2024

A demand-driven supply chain can help organizations glide through the choppy waters of today’s business challenges. It takes close collaboration and teamwork across the entire value chain to get there. BY KAREN KROLL

T o remain competitive in today’s fast-paced, dynamic consumer marketplace, companies need to be able to respond efciently and intelligently to evolving customer demand as well as supply chain disruptions. Demand-driven supply chains—those that focus on inbound logistics—play a key role. Two of the biggest challenges facing modern supply chains are ckle consumers and an array of disruptions that can wreak havoc on supply chain effectiveness. Case in point: 70% of shoppers responding to a recent survey say they are willing to switch to new brands, even for products they regularly purchase. Similarly, the percentage of customers who say they are loyal to certain retailers dropped from 76 to 66% between 2022 and 2023, according to the SAP Emarsys Customer Loyalty Index. On the disruption side, consider this: More than four in ve respondents to a recent Blue Yonder survey say their organizations have experienced delays and/or stalled production. Top causes include lack of materials, extended delivery times from materials suppliers, and labor shortages ( see chart, next page ). Shifting to a demand-driven supply chain can help organizations respond more effectively to both of these challenges. Demand-driven supply chains are “characterized by close synchronization with customer demands and the capability—through process, technology, and organizational resources—to

efciently manage and adjust the inbound ow of materials according to changing demand,” says Ling Lin, director and supply chain practice lead with Clarkston Consulting. The benet? “The organization is equipped to proactively detect and react to demand uctuations, while minimizing inventory levels and without sacricing service-level commitments,” Lin adds. Becoming Demand-Driven It’s not enough to simply understand demand. Organizations also need to understand their supply chain capacity and capabilities. Without this insight, they’re less able to identify the strategies that will best meet demand in a way that is protable, says Vikash Goyal, vice president, product strategy with Oracle Cloud supply chain management. Traditionally, supply chains frequently relied on demand forecasting processes that leveraged historical information. However, this assumes future demand will follow roughly the same pattern as historic demand. With customer preferences rapidly changing, as well as shifting economic conditions and unpredictable geopolitical tensions and trade policies, supply chains need new ways to quickly shift focus and tactics. “The ability to sense, adapt, and respond to demand changes quickly is the key differentiating factor as compared to traditional supply chains,” says Srikanth Sripada, managing director with West Monroe.

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