AMR Research Inc. asked 100 companies what was their greatest supply chain risk. While conventional logic suggested supply disruption would be the high risk factor, the companies pointed to increasing demand error as the greatest risk.
In the survey, 64 percent indicated that demand volatility was the greatest challenge to their supply chain. Supply risks came in second with 60 percent of respondents concerned about logistics failures. Next was the concern about supplier relationships, which 59 percent identified as a critical risk.
In the report, AMR identified seven areas where technology and processes can reduce risk on the demand side.
Educate your organization on demand and the impact of demand-side risk. It’s important for members of each functional group to know their ability to improve demand visibility.
Design – don’t just accept – the demand signal. Step back and determine how many demand streams exist and how to align the demand streams with the best source of data.
Open up the channel and build demand networks. Use software as a service to build private networks to reduce design latency and develop a pull-based signal.
Focus on balancing risk with opportunity in sales and operations planning. Move from internal consensus processes to outside-in processes based on channel collaboration.
Decrease demand latency. Focus on the reduction of demand latency as a measurement in improving supply chain excellence.
Use downstream data as an indicator in forecasting processes. Use downstream data to mitigate risk safely.
Improve demand management processes. Synchronize demand across short-term and long-term views.
Source: AMR Research
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