Is Your Company Meeting the Demands of the Supply Network?
Has it become apparent to you that the world of supply chain logistics is centered around an “on demand” model of call and response? The processes are usually presented as a loop where the customer requires and the manufacturer supplies, and the meter of success is based on the speed of delivery. There are multiple reasons for this, but it must be acknowledged that one of the major factors is technology. Demand is driven by the customer, as faster response times become the norm in every aspect of their lives—including the areas of parcel delivery, banking and travel. It is rare that anyone should have to wait weeks for anything.
It is a trend which is only going to grow—within a decade, three quarters of the entire workforce will be comprised of millennials, who are the very people whose expectations grow upon every innovation technology can make in their lives. This is not necessarily a negative scenario, as increased demands often lead to necessary innovation and change. The question is whether the supply chain can withstand these growing levels of demand, without overburdening customers and employees?
This phenomenon has been coined as the “Demand Driven Supply Network” (DDSN) by AMR Research. The DDSN is a system of networked technologies and processes that sense and react to signifiers of demand in real-time from a variety of employees, suppliers and customers that can be spread across a vast network. The benefits of DDSN come from improvements in operational efficiency, product development and enhanced bottom lines. The modeling of customer demand is also affected. The former push system, where sales were predicted, is now antiquated in favor of a pull model, which responds directly to customer demand.
It has been apparent for some time to many leading companies, including IBM, that it is necessary to employ new models in order to bring down costs, enhance efficiency, and ultimately, provide a better service to customers and partners alike. IBM was able to make savings of $7 billion by reverting to the on-demand system based upon the pull model.
The speed of supply chain innovation combined with the rise in customer demand it brings is putting traditional supply chain models under unprecedented levels of stress. Companies who fail to innovate their models will certainly struggle to be competitive and most likely fall victim to the competition.