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Demand Driven Supply Chains help in accelerating new product success.
New product introductions are characterized by higher level of uncertainty in consumer demand patterns, making it particularly challenging for supply chains to fulfil actual consumer demand at a granular level. Companies operating with forecast-driven supply chains try to estimate demand at an aggregate level and apportion it to various geographies on certain rules of thumb for stock placement. Such a method is sure to result in stockouts in high demand areas and excess stocks in low demand geographies.
While first placement in retail outlets should be done on an estimate basis, it is important to sense actual repeat demand from retailers at a granular level and establish replenishment rules with dynamic buffers at the supply nodes. This will help allocate stocks dynamically to various retail outlets in line with their demand pattern and prevent both stockouts as well as excess stocks.
Many new products fail to reach their potential if their supply chains are not resilient enough. On the other hand, Demand Driven Supply Chains help the good products reach their potential faster and limit the downside if the consumer acceptance is low.