Demand Driven Supply Chain

Transcription

1 Demand Driven Supply Chain

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3 Paulo Mendes Jr. Demand Driven Supply Chain A Structured and Practical Roadmap to Increase Profitability

4 Paulo Mendes Jr. Catholic University Industrial Engineering Department Brazil Author s contact: paulo.ddsc@gmail.com ISBN e-isbn DOI / Springer Heidelberg Dordrecht London New York Library of Congress Control Number: # Springer-Verlag Berlin Heidelberg 2011 This work is subject to copyright. All rights are reserved, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilm or in any other way, and storage in data banks. Duplication of this publication or parts thereof is permitted only under the provisions of the German Copyright Law of September 9, 1965, in its current version, and permission for use must always be obtained from Springer. Violations are liable to prosecution under the German Copyright Law. The use of general descriptive names, registered names, trademarks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. Cover design: estudio Calamar S.L. Printed on acid-free paper Springer is part of Springer Science+Business Media (

5 To Betania, Matheus and Valentina, the Center of my Life

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7 Acknowledgment To my Lord, Jesus Christ who gave me the strength to continue in the most difficult periods of this journey and always sustain and guide my life. To my parents, Paulo and Gloria, who strived to provide me the first education and always motivated me to continue my development. I am so thank you for your efforts. To my friend and colleague, José Eugenio, who always provided good insight and great motivation to conclude this journey. To my friends and professors Eugenio Epprech, John Vande Vate, Kleber Figueiredo, Peter Wanke and Andre Lacombe for all support and feedback provided to enrich the content of this book. To my friend Lou Swanson, who provided me great motivation to finish this work. To the Industrial Engineering Department of Catholic University (PUC) for all the knowledge provided during my MSc and PhD. If you Can Dream, you Can Do it vii

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9 Book Summary Several companies have been implementing forecasting tools and processes to improve demand planning performance, but these initiatives were not enough to eliminate OOS problems, and improve supply chain efficiency, due to a mismatch between supply and demand, low forecast accuracy for medium and low volume products, high demand variability and/or high number of new product introductions. To cope with this scenario, most companies are trying to move from a pure Push strategy, which is to produce and distribute based only on forecast, to a Pull system, which is to operate based on actual customer demand, in order to balance supply availability with customer demand. This book aims to identify and describe the key components of demand driven supply chains, and based on these components, develop a structured and integrated assessment framework that companies can use to assess their current and desired future supply chain states in light of the Demand Driven Supply Chain (DDSC) concepts, and to define a supply chain strategy to move towards a customer centric operation, cost effectively. The framework presented in this book was applied in different supply chain operations of a global CPG company to validate the methodology and formalize an action plan for these operations to be able to move towards a DDSC. The results of the assessment showed that two operations are currently close to a basic push level, and one is closed to an optimized push level, confirming that there are clear opportunities for those companies to improve their performance based on demand driven concepts. Finally, another contribution of this book is the structured framework developed to design a 3-year supply chain strategy, which will consider the DDSC assessment results as one of the key inputs, and will support the implementation of the opportunities identified during the assessment. ix

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11 Contents 1 Introduction Book Overview Current Market and Business Environment References Literature Review on Demand Driven Supply Chain (DDSC) Demand Driven Supply Chain Concepts Methodologies for Assessing Demand Driven Supply Chain Benefits of Demand Driven Supply Chain References Proposed Framework Briefly Review of Research Design Building Theory from Case Study Research Research Method for Developing DDSC Assessment Framework Proposed DDSC Framework References Key Components of Demand Driven Supply Chain Supply Chain Processes Components of Demand Driven Supply Chain Demand Management Statistical Forecast Sales and Operations Planning Collaborative Planning, Forecasting and Replenishment (CPFR): Vendor Managed Inventory and Demand Visibility Supply and Operations Management Introduction Procurement xi

12 xii Contents Manufacturing Logistics Customer Service Senior Management Support Product Lifecycle Management (PLM) Introduction Proposed PLM Strategic Framework References Proposed Demand Driven Supply Chain Model Introduction Demand Driven Supply Chain Maturity Model Analytic Hierarchy Process Introduction to Analytic Hierarchy Process AHP Applied to Demand Driven Supply Chain Assessment Model References Example of Case Implementation and Author s DDSC Website Step-by-Step Process to Perform Assessment Using Author s Website Example of Practical Results Found in Three Operations of a CPG Company Overall Results Example of Detailed Analysis for Two Operations Based on DDSC Assessment Results Develop Supply Chain Strategy to Become Demand Driven Introduction Framework to Develop a Demand Driven Supply Chain Strategy References Summary and Future Developments Index

13 About the Author Paulo Mendes de Oliveira Junior Graduated in Nautical Sciences and Machinery from the Merchant Marine School in Has a PhD in Industrial Engineering from Catholic University, a Master of Science degree in International Logistics from the Georgia Institute of Technology, and a Master of Science in Industrial Engineering from Catholic University (PUC). Postgraduate in Marketing and in Management from Instituto de Administração e Gerência (IAG) of Catholic University (PUC), and in Finance from Escola de Pós-Graduação em Administração Financeira (EPGE) of FGV/RJ. Has global operational experience in the supply chain areas of Planning (Demand, Inventory and Operations and Production Planning), Procurement, Logistics and Commercial. xiii

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