Supply Chain vs Demand Chain-SCM Blog-06

Supply Chain vs Demand Chain

Supply Chain vs Demand Chain : Management of (DCM) Demand Chain Management relationships between Demanders and customers is solely to provide the best value to customers at the least cost in the demand chain. Demand chain-management is similar to Supply Chain Management, but with a customer relationship.

Demand relationship management and chain management software tools bridge the gap between customer supply chain management so that the organization’s supply chain processes are managed to deliver the greatest value as per customer demand.

DCM creates a strategic asset for the firm in terms of overall value creation as it enables the firm to implement and integrate SCM marketing and supply chain management strategies that improve its overall performance.

A study by Wageningan Netherlands University also sees DCM as an extension of supply chain market management due to the incorporation of an orientation perspective on its concept.

Demand driven supply network

A demand supply chain is a method of DDSN-driven supply network-management that involves supply chains in response to demand signals.

The main force of DDSN is that it is driven by customer demand. DDSN uses bridge technology compared to traditional supply chains. This provides DDSN market opportunities for sharing more information in the supply chain and collaborating with others.

DDSN uses a capacity model that consists of four levels. The first level is reacting, the second level is anticipating, the third level is collaborating and the last level is orchestrating. The first two levels focus on the internal supply chain while the last two levels focus on external relationships in the extended enterprise.

In a demand-driven chain, a customer activates the flow by ordering from the retailer, who belongs to the wholesaler, who belongs to the manufacturer, who supplies raw materials from suppliers.

Order in this structure, chain up, flow backwards. Many companies are trying to shift from a build order discipline-to-land prediction to point-of-operation. One of the property degrees of demand is zero percent demand driven inventory decision is based on forecast- means all production is and therefore all products available for sale to the end user are based on forecast.

This may be the case for fashion goods, where the designer may not know how buyers will react to a new design, or the beverage industry, where the products are produced based on the given forecast. A “100 percent driven one is one in which order is received before production-demand begins.

The commercial aircraft industry matches this description. In most cases, there is no production until the order is received.

Anti-competitive advantage

To create sustainable competitive advantages with DDSN, companies must deal with three situations. First, wrong Misconceptions, second demand driven execution, third, value creation through supply chain


There are five commonly made inaccurate (NDDSN) assumptions of demand driven

  • Companies may think they are demanding demand because they have a good forecast for their company.
  • They have implemented lean manufacturing
  • They have very good data on all their customers.
  • They feel that it is a technical project and corporate forecast is a demand sign.
  • They have a better idea of ​​customer demand.

An important component of DDSN is DDM “real-time”. CDM allows customer demand driven manufacturers to say what they want and where and when.

Demand driven execution

Demand chain management is similar to supply chain management, but with an emphasis on consumer bridge versus supplier PURA. The demand chain begins with customers, then funnels through any resellers, distributors, and other business partners who help sell the company’s products and services.

Demand chain includes both direct and indirect sales force. It is difficult to ascertain customer demand as the stock proves the UN / wrong. The OOS rate is around 8% according to the study by Cotton (2002, 2008). Sales promotion

OOS rates up to 30% exist for products under.

Reliable information about demand is required for DCM so reducing OOS is a main factor for successful DCM. Important to reduce Kastern and Guen and OS rates Describe the factors:

  • Data accuracy
  • Forecast and order accuracy
  • Order Quantity
  • fill again
  • Supply capacity time
  • Capacity Planogram Compliance and (Pack-out)
  • Shelf replenishment

The implementation of system supported processes leads to the extreme transaction process, the new technology described by Gartner Research. This technology allows large amounts of data POS, RFID to be processed in real time providing information for store managers, shelves managers and supply chains.

According to Ayers’ studies, the first thing companies need to do to find the appropriate methods to fit different types of companies is to achieve a world-class level of supply chain management

It is to assess your progress towards doing. To increase demand-driven levels, companies need to make a systematic effort.

Value creation through supply chain

A supply chain is a system of organizations and people, activities, information and resources involved in moving a product or service from supplier to customer.

Supply chain activities involve the conversion of natural resources such as raw materials and components into an end product that is delivered to the end customer.

In sophisticated supply chain systems, used products can re-enter the supply chain at any point where the residual is reusable. Supply chain links add money and labor and materials, etc. to the price.

The idea of ​​the value chain is based on the process view of organizations, the idea of ​​viewing a manufacturing (or service) organization as a system, each composed of subsystems with inputs, change processes, and outputs.

Equipment, buildings, land, administration and management involving the acquisition and consumption of input, change processes, and output resources. Value chain activities affect profits if not determined properly.

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