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This chapter is from the book

Signals that Demand and Supply Are Not Effectively Integrated

As our research team has worked with dozens of companies over the past 15 years, we have witnessed many instances where demand and supply are not effectively integrated. Commonly, our team is called in to diagnose problems with the forecasting and business planning processes at companies because some important performance metric—often inventory turns, carrying costs, expedited freight costs, or fill rates—have fallen below targeted levels. After we arrive onsite, we frequently hear about problems like those in the following list. Ask yourself whether any of these situations apply to your company:

  • Does manufacturing complain that sales overstates demand forecasts, doesn’t sell the product, and then the supply chain gets blamed for too much inventory?
  • Does the sales team complain that manufacturing can’t deliver on its production commitments and it’s hurting sales?
  • Does manufacturing complain that the sales team doesn’t let them know when new product introductions should be scheduled, and then they complain about missed customer commitments?
  • Does the sales team initiate promotional events to achieve end-of-quarter goals, but fail to coordinate those promotional activities with the supply chain?
  • Does the business not take advantage of global supply capabilities to profitably satisfy regionally?
  • Are raw material purchases out of alignment with either production needs or demand requirements?
  • Does the business team adequately identify potential risks and opportunities well ahead of time? Are alternatives discussed and trade-offs analyzed? Are forward actions taken to reduce risk and meet goals, or are surprises the order of the day?

If these are common occurrences at your company, then the case might be that your Demand/Supply Integration processes might not be living up to their potential. The case might also be that one or more of the critical subprocesses that underlie the DSI “superprocess” might be suffering from inadequate design or poor execution.

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