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An Extreme Form of Demand-Driven Supply Change Management?

16th January 2017 | Simon Eagle

Simon Eagle, author of Demand-Driven Supply Chain Management, discusses the challenges of companies adopting the demand-driven supply chain management methodology

Demand-Driven Supply Chain Management (9780749479978)

In January, I spoke with a young and very bright supply chain executive about his plans for 2017 given that he had run a simulation of his company’s historical demand across his supply network and parameters using the Demand-Driven Supply Chain Management (SCM) methodology. The simulation had definitively demonstrated that the Demand-Driven SCM process could have delivered his planned service levels from 60 per cent of his actual average inventory (whereas the historical service reality had actually been 5 percentage points lower than planned) without recourse to any expediting or focus upon achieving high levels of forecast accuracy.

He was clearly embarrassed and frustrated. Whereas he and his team had, after initial skepticism, fully bought into the somewhat counter-intuitive ideas behind the ‘how and why’ of Demand-Driven SCM, he had been unable to bring his senior management on board. His director, who had a long history working for multi-nationals, insisted that supply chain performance improvement could only be achieved by improving forecast accuracy and raising current safety stock levels. Quite rightly, this was an anathema to the executive, now that he understood Demand-Driven SCM, particularly as his company is private equity owned and, of course, ‘cash is king’.

This is a challenge that I have encountered numerous times when helping companies to adopt the Demand-Driven SCM methodology. The younger SCM Management and Planners, with a recent SCM education who experience the daily futility of expediting and fire-fighting that makes up 90 per cent of their working day, are often far more open-minded and interested than their older colleagues and management. We discussed the various tactics that he could employ to bring his senior stakeholders on board and he resolved to mull the issue over and try again.

A few weeks later, he contacted me to arrange a meeting to discuss a Demand-Driven SCM pilot implementation. I asked him how he’d overcome the change management obstacles and his answer was a technique I hadn’t heard of. He said not to take it too literally and described it in the form of a quote (with one word change) from Max Planck, the great German scientist who had, much against his own beliefs, inadvertently founded the science of quantum physics:

“A new scientific truth does not triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die leave, and a new generation grows up that is familiar with it.”

 

About the Author: Simon Eagle is a senior supply chain planning and strategy consultant with over 20 years of international industry experience and significant expertise in S&OP and demand-driven supply chain management. He works with manufacturing and distribution companies that wish to make a transformational improvement in their E2E operations and supply chain performance and does so through helping them to adopt 'demand-driven' planning and execution.

Click the banner below to purchase Demand-Driven Supply Chain Management, and use code BLGDDSCM20 to get 20% off your purchase.

 

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Logistics, Operations & Supply Chain Management

Kogan Page publishes groundbreaking books on logistics and transport, operations, supply chain management, and procurement. Our authors are leading thinkers in the field, sharing their insights from academia and industry. Follow us on Twitter @KPLogistics.

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