Email
sinha.rk.dr@gmail.com
Sales team’s alignment is a pre-requisite for moving to Demand Driven Supply Chain.
I was recently talking to a leading foods company who want to switch over to replenishment based DDSC. They were concerned that supplies henceforth will not match the sales forecast given by their sales team.
It is a genuine concern if the company has been operating on forecast based supply chain. I asked them if they had discussed it with Sales and given them both the options to choose from.
The first option is to continue with the current system of supplies based on forecast. Their internal service level agreement (SLA) will continue as ‘supplies vs forecast’. The repercussions are clear. If the demand accelerates, it would lead to stockouts and lost sales. On the other hand, if demand slows down, Sales team will need to ‘push’ a bit more to achieve their targets.
The second option is to move to DDSC where supplies will be based on customer demand. Their internal SLA would change to measuring product availability (no stockouts) and product freshness (balance shelf life). If the demand accelerates, supply team will make more stocks available. If the demand slows down, supplies will be cut while ensuring enough stocks for customer demand. Supplies will not be measured against forecast!
When they discussed it with the sales team, it didn’t take much time to agree on the second option. Sales were not only happy, they were delighted!
My suggestion would be to discuss with Sales, get their alignment, and then move to implement DDSC. Skipping the first step often leads to more stress, heartburn and a missed opportunity.