The combination of shorter product lifecycles, a broader variety of goods and the need to respond faster to customer demands puts inventory levels under pressure. While sales fight to maintain market share, supply chains struggle to minimise the capital cost of inventories and obsolete stock.
In a demand-driven company, a synchronised supply chain does not pitch competitive delivery performance against cost efficiency - it balances them. When supply is planned, proportionate and appropriate to demand, the supply chain can operate to its full potential, delivering the right products and services to the customer in a timely and cost-effective way, as MAN Diesel shows.
To be this lean, agile and responsive, supply chains need to be:
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Forecasters: plan based on capacity but execute on actual orders with critical adjustments in case of imbalance
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Engagers: involve senior management in sales and operations planning principles and decision-making to incorporate company-wide priorities
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Governors: apply clear measures for transparency of processes across all functions which face differences between actual demand and demand agreed
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Connectors: integrate the company strategically, tactically, operationally and financially to allow planning and execution to work in the same direction.
PA Consulting Group shares this philosophy of moving supply chains towards an integrated sales and operations planning. A wireless telecommunications player transitioned from being forecast-driven to an agile organisation with build to order demand-led processes, and reduced working capital by well in excess of 50%.
To explore if your company has a common view across functions on how to secure supply, please contact us now.
