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What’s coming in the way of adopting Demand Driven Supply Chains?
Let me start by saying that I am a strong advocate of Demand Driven Supply Chains (DDSC), which help in aligning supplies to actual demand on an ongoing basis. I have also implemented it at multiple places across various industries and it has given remarkable results in all implementations. Product availability has improved significantly and overall system inventory has come down.
However, when I look around, I see many DDSC implementations which are struggling to deliver benefits. In many other cases, companies want to stick to their Forecast Driven Supply Chains. Why should it be? What could explain non-adoption, struggling implementations as well as successful implementations?
In my opinion, the reason why many leading companies are sticking to their Forecast Driven Supply Chains is because they are able to incorporate the impact of various Demand Drivers into their forecast. When I look at the struggling DDSC implementations, they have failed to incorporate this impact, whereas successful implementations have actually incorporated it through the Demand Sensing module. The near term demand predictions are used by them to resize inventory buffers before applying the replenishment logic.
If you are looking at making your supply chain more agile and responsive to demand changes, do consider implementing DDSC along with the Demand Sensing module. You will get the best of both the worlds!