Demand Chain Management Essay Example

substantial savings in the supply chain by reducing inventories and improving logistic communications. Moreover, it enables better customer service by meeting demand on time through enhanced forecasting and reducing non-value added activities.

Despite its benefits, DCM also has its drawbacks. One important point to consider when implementing this concept is that if there is distorted information in any part of the supply chain, it can have negative consequences such as loss of revenue and poor production planning. In the author's research, a strategy matrix (Model A to D) was created to categorize the level of internet-based integration for demand and supply. Model A had little or no web-based integration, Model D had the highest level, while Model B focused on integration with suppliers and Model C with customers. The initial set of hypotheses tested showed that integration has a direct relationship with company performance, both for manufacturers and service providers.

Only the service business performance will not be affected by full demand integration (Model D) as opposed to other factors. A separate set of hypotheses indicated that demand chain integration is driven by anticipated rational efficiency in the supply chain and access to new markets. External pressure and the bandwagon effect have little influence. Overall, the results from both hypotheses demonstrate the importance of demand chain management (DCM) for manufacturers but not for service providers. This may be due to the varied categories of service businesses, as some require more inventories than others.

However, the main insight provided was that companies will adopt integration when there is upstream pressure to do so. Conversely, companies will only integrate downstream if the benefits outweigh the cost. Therefore, manufacturers are

more likely to implement upstream integration before downstream integration.

Robust Planning: A new approach to demand chain planning

This paper supported the idea that supply chain management (SCM) and demand chain management (DCM) can improve supply chain efficiency and meet customer demand. However, it argued that the sources of uncertainty in the chain process were not properly addressed.

In practice, uncertainty is typically avoided by requesting the user to specify the inventory level point or by obtaining every individual customer detail to enable detailed planning. This is referred to as pure deterministic planning methods. However, any deviation from the anticipated data will lead to supply chain disruption and increased lead time. The explanation for this issue is the bullwhip effect, which arises from inadequate forecasting methods. Any fluctuation in consumer demand will lead to variation in stock level and lead time that were not accounted for in the planning. As a result, overall performance is negatively affected as well.

The scheduling of orders in complex supply chains is currently facing limitations due to factors such as fast pace and high level of detail. Uncertainty in supply chain management can be found at strategic, tactical, and operational levels. The robust planning paradigm, proposed by the author, focuses on the tactical level and allows manufacturers to allocate sufficient time to plan and fulfill demand in a more predictable and stable manner. To achieve this, the supply and demand chain is assessed using Monte Carlo simulation. The primary objective of this simulation is to identify an optimum level that minimizes the need for schedule re-planning or decision-making with the lowest variability in performance measures, considering uncertain factors

like customer service level and expected value.

The manager can use robust planning to find the best balance between meeting demand and maintaining enough buffer stock. The author conducted a case study on a chemical manufacturer with worldwide operations to demonstrate the actual impact of robust planning. By reducing supply chain inventory by over 50% and storing more inventory upstream, the manufacturer can easily convert inventories into other products at a lower cost without compromising customer service. Additionally, contingency planning allows the manufacturer to quickly adjust plans in response to unexpected events.

Lastly, the firm's planning efforts have decreased by 50%, particularly in the re-planning stages. By utilizing probabilistic planning algorithms to anticipate both anticipated and unforeseen events, it enables more precise information for decision-making, despite the initial planning process being more complex. This ultimately helps reduce the need for re-planning.

Analysis and design of targeted demand chains

Global competition has become prevalent across all industries. In order to stay competitive, manufacturers must customize their demand chain strategy to cater to their customers.

Thus, the paper discusses how a UK lighting company implemented a focused demand chain in two phases to gain a competitive edge in a commodity product. The crucial step involves categorizing the types of demand chain into five parameters known as the DMV3 (duration of product life cycle, lead time for delivery, volume, variety, and variability). By doing this, the company can identify the most efficient production strategies for each product within the demand chain.

Before making these operational changes, the company followed a traditional functional approach where all products were treated equally using the push principle driven by MRP and did not take

into account the DMV3 parameters. Suppliers were selected solely based on price and quality, without any loyalty to a specific supplier.

After implementing improvements in Phase one, the company consolidated its supplier base to 100. The focus of the demand chain shifted to cost competitiveness for high volume products using Kanban pull strategy and high service levels for low volume products using MRP push strategy.

The company experienced numerous benefits. By reducing the supplier base, they were able to save money through economies of scale in purchasing and establish strong relationships with suppliers for effective communication. This led to a decrease in unnecessary inventory, transportation, and processing. Most importantly, these improvements enabled the company to introduce new products more quickly by involving suppliers in the design phase, resulting in greater responsiveness to customer orders. In phase 2, the company focused on customizing the demand chain strategy for each product based on the DMV3 variables. This customization allowed them to prioritize the key competencies developed in phase 1 and achieve their efficiency goals.

The categorization of variables for each product line is crucial for the success of implementation and the chosen demand chain strategy. Incorrect categorization can result in failure. Nonetheless, the paper offers empirical studies on classification that can be applied to other industries in a generic context.

The Theory of Demand Chain Management: Constraints and Development in the Global Aerospace Supply Web

The paper presents an empirical methodology to identify the appropriate location for strategic capabilities within the supply chains of a global aerospace company.

The internet has revolutionized supply chain management for original equipment manufacturers (OEM).

In order to prioritize efficiency, OEMs have started outsourcing non core activities to subcontractors, leading to a new form of operational management. In the aerospace industry, the author's research indicates that up to 70% of the final value is contracted out.

The article discusses the need for strategic capabilities in the firm and how to effectively coordinate them with subcontractors. It presents two frameworks, Transaction cost Economics (TCE) and resource based view (RBV), to determine the strategic capabilities that should be owned within the supply chain. TCE helps identify constraints in the demand chains, while RBV helps identify capabilities. By utilizing these frameworks, manufacturers can strategically plan their capabilities based on industry drivers for change.

Efficiency and customer satisfaction in Supply to demand chain management

The study conducted by the author focused on achieving both supply chain efficiency and customer satisfaction. To understand this, the author examined the practices of Nokia, a company in a rapidly evolving industry. The research discovered that establishing strong customer relationships led to improved information quality, greater efficiency, and higher customer satisfaction. This positive feedback loop further enhanced customer relationships. The findings emphasized the importance of customizing demand chain management according to specific needs and situations, starting with customer involvement at the initial stages of the process.

The role of reducing lead time in improving demand chain performance

The paper emphasizes the importance of decreasing lead time before implementing any demand chain strategy. Through a case study, the author discovers that even if companies prioritize their customers, they will struggle to meet customer requests if their supply chains are inefficient. Empirical testing reveals that the

approach of Demand Chain Management (DCM) may not be suitable for every firm. Firms without demand variability ought to focus on improving supply chain efficiency, while those facing marketing variability should aim for effective customer information transfer. Firms with short lead times should swiftly gather demand information to enhance their competitive advantage, while those with longer lead times should integrate planning and forecasting with their customers.

DCM: A comprehensive approach in automotive retailing

Many companies seek a solution that addresses all their supply chain challenges.

Many papers were written to develop a solution for a real case company. However, only a few customized the research solution for a specific company. This paper utilized an integrative approach to examine different aspects of an organization's strategy, including strategic cost management, marketing, policy, and process-based lean thinking. The study focused on an automotive retailer.

The author discovered that integrating all four management areas can contribute towards a competitive advantage for a company. However, the results were inconclusive and further testing on companies outside of the UK is needed.

Discussion

The research papers discussed various factors that would lead to a successful demand chain management strategy, resulting in significant improvements and cost savings. The main idea is to prioritize customer demands. The case studies examined a range of manufacturers, from complex aerospace operations to simpler lighting operations, providing a comprehensive view of how DCM can be implemented across different industries.

The research papers indicated that service providers do not gain any advantage from this concept because of limited inventory. There have been only a few studies conducted on services using the DCM system. Therefore, an area that requires further investigation would

be the service sector. Another topic worth contemplating for research is the challenges of implementing this system in a company. Most of the research cases focused on successful factors, but there may be some companies that failed to implement it effectively, offering valuable lessons.

Furthermore, the implementation of a well-functioning system like DCM necessitates the participation of all stakeholders within the company, which may result in significant expenses. Research must be conducted to analyze the quantitative cost and benefit data associated with the implementation of such a system, which would prompt considerations regarding whether every company can afford to adopt it. Additionally, there are numerous concepts outlined in different journals, encompassing both traditional approaches like Total Quality Management and Just-in-Time (JIT), as well as newer concepts such as supply chain management and demand chain management.

Some companies may have already implemented a system that is currently in use. Research into how companies have transformed or enhanced existing systems to DCM could offer valuable insights for other companies seeking to do the same.

Conclusion

Research papers from journals provide new ideas on the recent industry changes. These papers are an important source of knowledge, and management should stay updated with the latest developments through such sources, as they are directly related to their competitiveness.

One important lesson learned is the importance of considering multiple perspectives in order to understand a concept. The various research papers we analyzed covered different aspects of the subject, with some overlapping information. This allowed us to gain a comprehensive understanding of both the advantages and disadvantages of the concept, which in turn enables us to plan for potential challenges. When it comes to operations

management, it is an ever-evolving topic. The industry and global trade constantly experience changes that give rise to new ideas and approaches.

However, the main ideas that remain essential are an efficient supply chain and meeting customer demands with high quality and short lead time. New ideas build upon these core concepts, so it is important to have a solid understanding of the foundation before applying any new concepts. This paper on demand chain management gave me insight into how manufacturers make decisions about their chosen system. Reading research papers sparks thoughts about the complexity of real-world operations. In fact, operation management is a thoughtful process that encompasses every level of management and can either enhance a company's competitiveness or hinder it with inefficiency.

Toyota serves as a prime example of successful operation management, as its efficiency has become a distinguishing factor that sets it apart from others. This feat has proven difficult for competitors to replicate. Considering this reality, if I were employed in a manufacturing company or had plans of owning one in the future, I would undoubtedly apply more extensive thinking in the realm of operation management. However, conducting research on demand chain management presents challenges due to its relative novelty when compared to well-established concepts like JIT or supply chain management.

However, limited research has identified areas for future development. Another challenge is the lack of experience in industry practices, which makes it difficult to fully understand the problems and benefits related to the research topic. Sometimes, a concept may seem excellent and manufacturers may feel strongly that it should be adopted. However, implementing a concept can be challenging, especially when there is already

an established system in place. It may lead to the loss of valuable customers and time for a company. These challenges can only be understood by someone who is knowledgeable about the industry and has practical experience.

Understanding the jargon and ideas presented in research papers is undeniably challenging.