Demand Driven Operating Model and Adaptive Enterprise

In Times of High Volatility, It Is Time to Build the Truly Lean and Agile Enterprise

Today, many companies are faced with increasingly complex scenarios in managing their supply chains from purchasing through internal operations to distribution. Seamless integration of internal and external actors becomes a key for creating a high performance supply chain. Demand and supply patterns tend to be more volatile while customers expect shorter lead times, higher agility. At the same time, expectations towards financial and operational performance force companies to implement leaner processes, improve their working capital and reduce cost, all without hurting their service levels to the market.

Companies that are successful in combining lean and agile operations with an integrated management approach that ties together the various functions of the company, enjoy much better flow and agility of their supply chain activities, resulting in better customer service, leaner inventories and better financial results.

What are these companies doing differently? Some common characteristics and practices:

• A global approach at their supply chain, product and information flows, from end to end
• Demand-driven pull systems protected by strategically chosen buffers
• Agile and lean, decoupled flows between buffers dampen variability and decouple lead times
• Bottlenecks, capacity constraint resources, and control points are protected and serve as anchors for planning
• Stock, capacity and time buffers create a predictable and agile system, promoting and protecting flow
• Operations, financial and Go-to-Market strategies are aligned to drive key business plan parameters for operations
• These parameters are aligned with planning and execution in a bi-directional way, ensuring that operations can purchase
• Actors from different functions closely cooperate in these processes: finance, sales & marketing, purchasing, production, distribution human resources, general management and share a common set of goals and key metrics

These are the characteristics of a Demand Driven Adaptive Enterprise (DDAE) and a Demand Driven Operating Model (DDOM). The DDOM is a supply order generation, operational scheduling and execution model utilizing actual demand in combination with strategic decoupling and control points and stock, time and capacity buffers in order to create a predictable and agile system that promotes and protects the flow of relevant information and materials within the tactical relevant operational range (hourly, daily and weekly). A Demand Driven Operating Model’s key parameters are set through the Demand Driven Sales and Operations Planning process to meet the stated business and market objectives while minimizing working capital and expedite related expenses. In consequence, the model spans from strategy to tactics to operations.

Learning Paths

Two learning options are available to those who want to build a strategic advantage based on superior supply chain performance with a DDOM:

• The Demand Driven Leader Program (DDL) equips middle, senior, and executive managers with the necessary logic, processes, measurements, and tools to implement a DDOM in their company. They learn how to design, implement and sustain a Demand Driven Supply Chain. The program spans planning, operations, distribution and finance. You can find more information on the DDL here.
• The Demand Driven Planner Program (DDP) equips planning personnel in supply chain planning and execution (procurement, manufacturing, distribution) and their immediate managers with the necessary logic, processes, measurements, and tools to design, plan and execute in a demand driven supply chain. You can find more information on the DDP here.

While there is some overlap between the two programs (the material on DDMRP in the Demand Driven Leader Program is a shorter version of the Demand Driven Planner Program), the DDP provides detailed and thorough coverage of DDMRP while DDL is more in depth on the financial, measurements and Sales and Operations Planning aspects. The DDL also enables a company to build the necessary system to take full advantage of DDMRP and the demand driven philosophy in general.