3 Steps to a Demand-Driven Supply Chain
The on-demand economy means customers expect instant gratification via immediate access and convenient delivery options. Companies must adapt and start optimizing their supply chains to stay competitive.
Many companies are still supply driven, constrained by resource capacity, archaic scheduling technologies, and inefficient decision-making. Typically, these businesses match demand by increasing the supply and infrastructure to support it. To become demand-driven, companies must consider three actions:
- Leverage real-time data. Data is key to providing valuable insights into what is working in the supply chain and what can be improved. Analyzing data in real time can help answer the most critical question: 'What do I do now?' Dynamic real-time optimization of the supply chain enables companies to use data to make rapid decisions and create actionable plans by taking all aspects into account.
For example, a same-day grocery delivery service may have extra delivery trucks on standby, ready for an influx of orders, to ensure it meets ad-hoc demand and delivery timeframes. Or alternatively it tries to 'box' its delivery schedules with large time windows to allow more perceived flexibility. This model is not sustainable.
What if the company's supply chain was optimized to handle random ad-hoc same-day orders, completing all the deliveries with fewer trucks within accurate time windows? Leveraging data with dynamic real-time optimization, companies can consider all factors and determine what truck should take new deliveries while also keeping the rest of its previously scheduled orders on time.
- Optimize staff. Having the right person at the right time is crucial for employers. Many organizations often understaff, overstaff, or assign one person to a task when another is better suited, impacting productivity and customer service.
Just as a company may overbuy delivery trucks to have on hand for surge times, it also tends to have more employees than necessary for the same reason.
Companies can do more with fewer employees if they properly identify the inefficiencies and constraints. With interruptions to staff availability, changing shift schedules and demand, as well as regulatory and operational constraints happening each day, businesses must be able to quickly adapt. Resource optimization can adjust accordingly and also take into consideration issues such as required breaks, logical shift planning, and who can best cover when an employee calls in sick.
- Prepare for disruptions. Being able to adapt to any disruption keeps a business operating smoothly and efficiently. No matter the size of the disruption, the financial impact can be severe for a company with a supply chain that isn't optimized and prepared to react in real time.
The key is making the supply chain nimble and able to react quickly with an actionable plan when (not if) a disruption occurs—mitigating as much risk and financial loss as possible.
If businesses leverage data to its fullest potential, converting it in real time to actionable operating plans, they could see a significant reduction in operating costs and resources, while also increasing customer satisfaction and improving the bottom line.