Let’s be really clear what we mean when we say Demand Driven
Supply Chain is [in]famous for it acronyms, buzz words and hype cycles. There are more band-waggons than ever and an acceleration towards the latest and greatest tech driven innovation.
Terms like Digital, Demand Sensing, XXX-Analytics (insert any funky adverb here) and even Demand Driven can mean many things to many people. Often consultants, tech vendors and analysts will use these term to position their products within the new fashionable context.
It could be argued that all Supply Chains are ‘demand driven’ in one way or another.
However, Demand Driven using DDMRP at its core, is something very specific and it is very different to traditional forecast driven MRP planning methods.
So, for the record, at SmartChain we use the following simple definition
Demand Driven is a robust supply chain method that is designed to deal with uncertainty and proven to deliver higher service with significantly lower cost than traditional SCM methods. It uses real demand to drive finished goods and materials planning and uses stock buffers to decouple the supply chain and control bullwhip. The forecast is used to help setup and manage a demand driven supply chain but it is NOT used to drive the execution.
Industry evidence and academia both show that Demand Driven is significantly more effective in today’s world of uncertainty and complexity.