A supply chain’s ability to respond rapidly to demand variability, and match it with supply, will yield lower working capital requirements and stronger sales levels, according to the recent report Improving the Consumer Electronics Supply Chain: Applying Demand-Driven Practices to Reduce Lead Times.
Published by Tompkins International and One Network Enterprises, the report explains the financial benefits of using new technologies such as cloud-based networks for demand-driven supply chains. The near real-time matching of supply and demand minimizes inventory, reduces lead times and maximizes sales, the authors suggest.
“The ability to reduce variable lead time enables significant decreases in inventory levels, as well as improved customer service levels, product availability (both on-shelf and online), and ready-to-ship statuses,” says Gene Tyndall, executive vice president at Tompkins International. “All of this boosts sales revenues.”
Gartner Research estimates that up to 40% of actual lead time in supply chains is due to system lead time (SLT). While companies have invested heavily in information technology, SLT is still a problem due to multiple system and IT platform integration issues. The report’s authors recommend a single cloud-based platform that is flexible and allows each company in the supply chain to implement its own processes.
The report shares five technology pillars to consider when responding to real-time demand:
1. Any‐to‐any, multi-echelon network‐based architecture;
2. Best-of-breed application functionality and a Single Version of the Truth;
3. Continuous and incremental recalculation of requirements tied to execution;
4. Advanced sense and respond (real-time sense with real-time automated response); and
5. Scalable/flexible architecture that is easy to deploy.
“When the right technologies are employed on a platform,” says Doug Kane, Industry Partner at One Network, “SLT is eliminated and inventories are significantly reduced for any manufacturing company.”