Upgrade to a demand-driven supply chain 2.0 in five steps

How to upgrade your demand-driven supply chain

An exciting future beckons, where supply chains respond almost instantly to customers’ needs.

Partner, ASPAC Head of Supply Chain

KPMG Australia

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Whether it’s drones delivering umbrellas or medical supplies, 3-D printers producing an ever-wider range of personalised products or real-time adjusting of production to match varying demand, changing the supply chain into an integrated, transparent network can bring enormous benefits.

The following five steps can help bridge the gap for companies to reach a new level of customer responsiveness:

1. Align the supply chain with the business

Commit to the customer experience

A supply chain can only deliver its full value when the entire organisation is oriented towards delivering an exceptional customer experience. This is as much about philosophy as it is about process and is likely to involve a wider cultural change.

Focus on value

A value-based management approach can build a foundation for each supply chain decision and help to communicate the supply chain story to a broad variety of stakeholders. As mentioned earlier, a lack of congruence can cause barriers, due to conflicting goals, with management in different functions measured and rewarded for different types of targets.

2. Improve supply chain visibility

Develop a digital strategy

Cloud-based software, increasingly via mobile devices, can accelerate the speed of data transfer across the supply chain, enabling customer facing partners to link transactions to inventory reports (updating systems in minutes) and, ultimately, all the way back to the manufacturer. Other digital media such as social media can help to gauge the volume and types of customer demand.

Utilise the power of data and analytics

Analytics can inform segmentation, help predict customer needs, forecast volumes, anticipate disruptions, manage inventory levels and simulate the outcomes of potential responses to different scenarios.

3. Instill flexibility and agility

Become more flexible

By anticipating future market changes and taking appropriate steps, companies can be better prepared for either shocks or opportunities.

Develop agility

Businesses that recognise the increasing pace of change build more flexible business models that can adapt.

4. Organise for success

Establish cross-functional governance

As companies climb the supply chain maturity curve, cross-functional governance becomes vital, to ensure that decision-makers in different parts of the supply chain are communicating with each other and making decisions in the best interests of the wider organisation.

5. Address customer segments 

Through data analysis and one-to-one research, find out exactly what matters to customers and what trade-offs they are prepared to make. When these findings are combined with cost-to-serve data, companies can meet the demands of each segment cost effectively.

Don’t try to leap directly to full supply chain maturity. A sensible starting point is to align the end-to-end supply chain objectives with functional and cross functional goals.

Demand-driven supply chain 2.0: a direct link to profitability

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