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It’s time for more manufacturers to question what being demand-driven really means by looking at their businesses the way their customers do.
Having accurate forecasting processes, a finely-tuned sales and operations process (S&OP) or being great at new product development and introductions isn’t enough. These are all great attributes, but they must be synchronized into a cohesive strategy if a manufacturer is going to become demand-driven.
Like customer-centricity, demand-driven has become one of the latest mantras you can hear CEOs repeating in their CNBC interviews.
Don’t get me wrong, it’s great that they value their customers – but precious few have done the hard work of orchestrating demand, supply and product networks so that they consistently deliver above customer expectations.
Few have also worked to alleviate the inevitable scheduling differences across demand and supply networks, while synchronizing with their internal product networks.
Keeping all three networks tightly integrated, orchestrated and synchronized – and exceeding customer expectations – is what being demand-driven is all about.
When a manufacturer successfully orchestrates demand, supply and product networks well, costs and time-to-market go down while sales and customer satisfaction increase.
A recent study by Gartner found that manufacturers with exceptional demand-driven strategies in place operated with 15 percent less inventory, saw perfect order fulfillment increases of 17 percent or more, and have 35 percent shorter cash-to-cash cycles.
According to the Boston Consulting Group study The Demand-Driven Supply Chain: Making It Work and Delivering Results (published in May 2012), manufacturers who have more efficient demand-driven supply chains reduce order fulfillment cycles by days and, in some cases, weeks.
One of the most visible signs of manufacturers excelling at being demand-driven is that they are continually exceeding customer expectations.
They also are always looking for ways to streamline how their demand management, supply chain and product development organizations collaborate. Their cultures reverberate with trust and openness.
Using cloud-based ERP systems, they are able to share data, insights and manufacturing intelligence corporate-wide, in realtime, further breaking down silos.
Here are five strategies for the journey to becoming demand-driven:
Bottom line: The highest-performing manufacturers are able to translate demand-driven manufacturing into reduced inventory, stronger perfect order fulfillment and faster cash-to-cash cycles while increasing customer satisfaction.