their transportation, warehousing, and storage costs. In doing so, they’re often able to reduce energy and fuel use— key steps for organizations trying to hit sustainability goals. First, Face the Challenges At the same time, organizations shifting to demand-driven supply chains often must rst tackle several obstacles. One is engaging suppliers, and working with them to respond to demand uctuations. Some suppliers may instead opt to “decouple” from their customers, and operate under their own set of conditions, says Charles Clevenger, principal with UHY Consulting. This can be a result of operational issues. For instance, a supplier’s manufacturing process might be optimized when it’s working on standardized, high-volume runs. In contrast, one customer has a fair amount of variety in its products. principal This issues. manufacturing optimized standardized, “The challenge becomes how do we harmonize that? How do we nd a common ground that works for that manufacturer as a supplier and our supply chain and our customers?” Clevenger asks. Before a demand-driven supply chain can take hold, many organizations need to break down internal organizational
Manufacturers that leverage a demand-driven supply chain approach are able to stabilize their production lines during demand surges and use their manufacturing capacity eciently. stabilize eciently. able
Organizations that leverage demand- driven supply chains are generally better able to satisfy their customers, whether end consumers or other businesses. For example, by employing a demand- driven approach and technology, one of West Monroe’s retail clients increased its on-time, in-full (OTIF) metric from 10% to 13%, Sripada says. This uptick boosted the client’s customer experience and satisfaction. In addition, because they focus on product availability and responsiveness to customer demand, demand- driven supply chains typically are well positioned to capture sales opportunities and capitalize on demand uctuations. And by accurately analyzing demand, organizations can better assess how different products or services are impacting their top line. Ultimately, that can boost revenue. Manufacturers with large, complex inbound supply chains can leverage a demand-driven approach to stabilize production schedules and avoid some changeovers when they try to accommodate demand surges, Sripada says. As a result, they often can more ef ciently use their manufacturing capacity.
The data captured from a demand- driven supply chain can also help organizations boost inventory turns (because they’re responding to customer preferences) as well as reduce excess or obsolete inventory. As a result, they’re able to use working capital more ef ciently, and rein in expenses. Organizations that exercise better inventory control also can optimize demand-
Supply Chain Disruptions Still Top of Mind 42 % report delays 42 % report stalled production 39 % face regulatory challenges
Lack of raw materials
48 %
Extended delivery times
47 %
Lack of labor
44 %
Lack of shipping vessels
41 %
Changes to shipping routes
25 %
Geopolitical unrest
16 %
Source: Blue Yonder Supply Chain Executive Survey
134 Inbound Logistics • July 2024
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