We use cookies to provide you with a better experience. By continuing to browse the site you are agreeing to our use of cookies in accordance with our Cookie Policy.
  • ::COVID-19 COVERAGE::
  • INDUSTRY PRESS ROOM
  • SUBMISSIONS
  • MEDIA FILE
  • Create Account
  • Sign In
  • Sign Out
  • My Account
Free Newsletters
  • MAGAZINE
    • Current Issue
    • Archives
    • Digital Edition
    • Subscribe
    • Newsletters
  • STRATEGY
  • GLOBAL
  • LOGISTICS
  • MANUFACTURING
  • PROCUREMENT
  • VIDEO
    • News & Exclusives
    • Viewer Contributed
    • Upload your video
  • BLOGS & MORE
    • White Papers
    • Webcasts
    • Events
    • Blogs
      • SCQ Forum
      • Reflections
    • Mobile Apps
  • MAGAZINE
    • Current Issue
    • Archives
    • Digital Edition
    • Subscribe
    • Newsletters
  • STRATEGY
  • GLOBAL
  • LOGISTICS
  • MANUFACTURING
  • PROCUREMENT
  • VIDEO
    • News & Exclusives
    • Viewer Contributed
    • Upload your video
  • BLOGS & MORE
    • White Papers
    • Webcasts
    • Events
    • Blogs
      • SCQ Forum
      • Reflections
    • Mobile Apps
Home » Demand-driven supply chains demand new metrics
Perspective

Demand-driven supply chains demand new metrics

September 24, 2013
James A. Cooke
No Comments

As companies try to manage volatility in a global economy, more are expected to embrace demand-driven supply chains. Unlike traditional supply chains that base forecasting on historical data, demand-driven supply chains (DDSCs) use demand signals such as point-of-sale data to determine replenishment and production. The demand signals are then shared with all partners in the chain.

Interest appears to be growing in DDSCs. The consulting firm KPMG's 2013 global manufacturing outlook survey found that for companies with more than $5 billion in revenue, demand planning was the number two supply chain priority. It's easy to see why, since demand planning can reduce inventory levels and thus save working capital. The Boston Consulting Group recently said that, based on its research and experience with clients, companies with advanced DDSCs (those that provide end-to-end visibility of consumer purchases all the way back to suppliers) carry 33 percent less inventory than do companies with other supply chain models.

A DDSC forces suppliers, manufacturers, and retailers to work more closely together than has been the case in the past. For a demand-driven supply chain to work properly, they all have to be pulled in the same direction; in other words, information from the retailer has to serve as the basis for replenishment. But because manufacturers and retailers evaluate their supply chain performance on different metrics, that could create misalignments.

Take retailers. They often evaluate supply chain performance on such metrics as in-stock rates and order-to-delivery time. Manufacturers, however, judge performance on fill rates at their DCs for customer orders. That's among the reasons why one large consumer packaged goods manufacturer has proposed that DDSCs judge performance on "service as measured by the customer." Since the customer is pulling the product based on demand signals, then the customer should set the pace. Gene Tyndall, a consultant with Tompkins Associates who has written about demand-driven supply chains, said that the CPG company (which does not want to be named) believes its current service-level metrics should be synced with the measurements its customers use.

As more companies look to initiate DDSCs, supply chain executives need to have a discussion on whether new, holistic metrics that measure supply chains on end-to-end flow will be required to make this approach work.

  • Related Articles

    Consider a hybrid approach to demand planning

    The next big things: "control towers" and demand shaping

    ASICS keeps pace with growing demand

James A. Cooke is a supply chain software analyst. He was previously the editor of CSCMP's Supply Chain Quarterly and a staff writer for DC Velocity.

Recent Articles by James A. Cooke

Getting smart about using software intelligence

The payback challenge

A farewell, with thanks

You must login or register in order to post a comment.

Report Abusive Comment

Most Popular Articles

  • The 3PL industry: time to reset

  • Resiliency starts with supplier mapping

  • Freight market growth expected to slow in 2021

  • Retailers designing stores to support inventory and logistics work, not just shopping

  • Seizing the helm

Featured Video

6cabd6ef 64df 4460 bb11 e90c2bdea0a5

Identifying Intralogistics Solutions to Fit Your Operation: LinkedIn Live Ep. 4

Viewer Contributed
As technology evolves, the advantages of using semi- and fully automated solutions to increase productivity and address labor shortages are clear. However, before an organization jumps fully into automation, optimization is a key step that must happen first. Intralogistics solutions, such as Raymond’s iWAREHOUSE and...

FEATURED WHITE PAPERS

  • Warehouse Management System Project Toolkit

  • Solving Talent Management Challenges Now and In the Future

  • Shaping Up Last Mile Delivery to Surpass Customer Expectations

  • Finding the Right Transportation Management Partner

View More

Subscribe to Supply Chain Quarterly

Get Your Subscription
  • SUBSCRIBE
  • E-NEWSLETTERS
  • ADVERTISING
  • CUSTOMER CARE
  • CONTACT
  • ABOUT
  • STAFF
  • PRIVACY POLICY

Copyright ©2021. All Rights ReservedDesign, CMS, Hosting & Web Development :: ePublishing