The traditional division of labor
In the supply chain organizations of large companies, work is divided between teams of demand planners and supply planners.
Demand planners interact with sales and marketing teams, to identify market trends and promotional activities, draw up forecasts, measure their accuracy, monitor order intake and so on.
Supply planners interact with the company’s internal and external suppliers – production at different sites, external suppliers. Their main concern is to ensure continuity of supply, without overstocking, while taking cost constraints into account.
This division of labor also exists within smaller companies, with customer service, production planners and procurement staff constantly passing the baton to each other.
An acceleration of tempo that challenges the organization
As demand and supply conditions evolve ever more rapidly, companies have realized in recent years the need to develop their agility.
This traditional division of labor between demand planning and supply planning, by creating a discontinuity of responsibilities and information flows, can work against this agility
It can also distort information within the company.
How many times have we seen supply planners who have no confidence in the forecast produced by demand planning, and who make their own assumptions in the corner of an Excel file?
What about this other company, where short-term demand is deliberately amplified in the DRP, to put pressure on factories and suppliers?
And what about those sales forecasts that everyone knows you won’t be able to achieve because you don’t have enough capacity? How many companies really have the ability to project sales that take constraints into account
Linking demand and supply planning
Positioning Demand Planners and Supply Planners in the same team, under the same responsibility, and in the same location is a way of smoothing out communication difficulties and facilitating collaboration and alignment.
More and more companies are also implementing “flow pilots” who combine demand and supply responsibilities, from one end of the company perimeter to the other
Orchestrating an S&OP process also helps to strengthen this collaboration, and to adopt a systemic approach.
However, these approaches remain piecemeal if there is no permanent structural adaptation between supply and demand.
End-to-end pull flow, the structural link
Rather than putting organizational patches on traditional management principles that run counter to agility, the establishment of an adaptive supply chain requires the structuring of an operating model that constantly ensures the timing of supplies in line with actual demand.
This operating model is a realistic and pragmatic representation of the capacities and constraints of production resources and suppliers – both now and in the future.
This calls into question the traditional division of labor, as the bidirectional propagation of the signal takes place naturally and fluidly, provided the process is supported by an end-to-end pull-flow solution such as Intuiflow
This profoundly changes the way our teams work. The focus is on monitoring and adapting the end-to-end control model. The key role becomes that of a modeler, overseeing the flow behavior in the company’s system – with a permanent overview
What IT solutions are needed to transcend demand and supply silos?
Traditional supply chain planning solutions – those promoted by Gartner in its Magic Quadrant – are historically based on demand planning. Their DNA is to focus on sales forecasts, and to deal with supply and production constraints via fixed, flexible and free horizons. Pull flow is not their basic principle.
Intuiflow’s DNA, on the other hand, is focused on the industrial model’s ability to respond to… highly unpredictable demand. The basic principle on which the solution has been developed for over fifteen years is: “forecasts are useful, but actual demand will be different”. This means matching operations to actual consumption, constantly adapting the response model, considering the system as a whole, and preparing for the future by expecting anything to happen…
What are the roles of an adaptive supply chain?
This evolution highlights the cross-functional roles of flow model pilots – the true orchestral conductors of adaptation.
In addition, operational tasks are lightened, focusing on exception-based risk mitigation on execution alerts.
There isn’t a standard organization that can be applied to every company – you have to build the organization that makes sense in relation to the interactions to be managed in your company – but the demand / supply planning dichotomy no longer seems adapted to today’s world!
