Supply and demand normally go hand in hand. A slight mismatch between the two will lead to either loss of market share or high working capital costs. Is finding an optimum balance hopeless especially when volatile customer demand is factored in? Integrating demand and supply planning activities can be challenging, nevertheless it is essential for the security and well-being of your organisation.
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 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 deviances between actual demand and demand agreed
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Connectors: integrate the company strategically, tactically, operationally and financially to allow planning and executing to work in the same direction.
PA 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.
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