Digital supply chain initiatives often don’t deliver the expected outcomes. The reason: outdated processes. A recent study reveals how Demand-Driven Supply Chain Management can help boost your digital supply chain initiative.
In many companies, initiatives for the digitalization of supply chains do not result in the desired improvements in profitability, growth, and efficiency. The reason for this is simple: Digitalization accelerates processes that no longer meet current requirements. The innovative concept of “Demand-Driven Adaptive Enterprises” is the answer to the new, volatile state of global supply chains. It ensures optimal processes and helps increase the ROI of digital supply-chain initiatives.
The concept involves managing a company entirely in accordance with customer demand and provides for (figurative) shock absorbers to cushion the impact of supply chain fluctuations. A new CAMELOT study investigates how far along companies are in implementing these concepts.
Spread of Demand-Driven concepts
For the study entitled “Multiplying the Digital ROI – the Demand-Driven Adaptive Enterprise,” over 40 companies from the chemical, pharmaceutical, and medical technology sectors, as well as from mechanical and plant engineering and the consumer goods industry were surveyed.
With respect to their own company, over 60% of firms consider themselves not at all or only slightly Demand-Driven (1-3 points out of 10). By contrast, 6% of participants view their company as being highly Demand-Driven (8 points out of 10). Of those surveyed, 16% say they have already created a road map for Demand-Driven enterprise concepts or are developing one. However, the vast majority of participants, over 80%, have not yet planned any concrete steps.
Key advantages of the Demand-Driven approach
Most study participants (almost 30%) see reduced inventories as the biggest advantage of the Demand-Driven Adaptive Enterprise approach. Those surveyed view the improvement in service levels (almost 25%) and flexible and agile supply chains (23%) to be nearly as important. Interestingly, strategic benefits such as higher revenue and profits, optimized working capital, and higher customer satisfaction are not yet listed.
IT systems and convincing the top management are the biggest challenges to implementation
Raising awareness among top management (33%) and adapting current IT infrastructure (almost 30%) are seen as the biggest challenges in realizing the concept. For although implementing a Demand-Driven agenda is definitely a job for top management, it is currently driven primarily by those responsible for supply chain management (over 60%). Nevertheless, the topic has already reached the CEO and COO level in 14% of companies.
