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A Playbook for Managing at the Crossroads

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Innovation Beyond The Four Walls

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October, 30, 2014

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DEMAND CHAIN MANAGEMENT

BENEFITTING FROM A WELL-TUNED DEMAND CHAIN

A well-tuned demand chain can cut everything from inventory costs to product delivery times and help organizations create a sustainable competitive advantage. Procter & Gamble, for example, reported $1 billion in incremental sales, a nearly 50% reduction in inventory, and 20% lower supply chain costs from its demand-driven supply network.

Optimization at this level takes time and effort, however. At minimum it calls for a careful balance between needs for low cost and speed, and the ability to respond to sudden changes in demand or supply interruptions. Also needed is tight integration of product and design data from across the enterprise -- including business partner inputs -- and then crafting a demand-chain strategy that meets customer and supplier needs.

BEST PRACTICES

Cognizant believes the following can assure a demand chain that is agile enough to meet today’s quickly changing business needs:

  • Create partner portals to share changes in supply and demand in real time.
  • Enhance virtual collaboration with suppliers on product design.
  • Increase use of postponement strategies to delay adding value or differentiation as late as possible in the supply chain process.
  • Build additional flexibility into logistics systems to anticipate and overcome disruptions, using third parties as appropriate.

Trimming costly inventory without delaying product delivery requires extensive market analysis and precision visibility into demand volatility. One consumer goods client kept production of high-volume and low-volatility products in China. For high-volume/high-volatility and low-volume/high-volatility products, production was shifted to the U.S., while for low-volume/low-volatility products it moved to the U.S. and Mexico. This reduced the cost of goods sold by 15% while boosting quality and service levels.

  • Our Latest Thinking

Manufacturers, Retailers Look to Adaptive Supply Chains to Increase Revenue, Cap Costs, Boost Productivity
Changing market dynamics and emerging technologies enable players across the consumer goods value chain to revisit their supply chain strategies.
Building a More Responsive, Intelligent and Demand-Driven Consumer Goods Supply Chain
Meeting the changing needs of global customers and regulators despite economic volatility and natural disasters requires a flexible and agile supply chain.
Vendor Managed Inventory: Providing Visibility Across the Pharma R&D Supply Chain
For pharmaceutical companies, R&D is essential to developing a stream of profitable drugs. Vendor managed inventory reduces the cost of ordering, stocking and tracking the supplies required for research.
Beyond the ‘Perfect Order’ Index: Obtaining a True Measure of Customer Value
Manufacturers and retailers need to rethink order execution to create continuous value and resolve customers’ most pressing needs. Revisit the concept of perfect order within the context of supply chain execution.
 

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