‘Learn to adapt or watch your business die’, was the harsh message delivered to UK Business Directors by Demand Driven Supply Chain guru, Carol Ptak, at the SCALA Demand Driven Supply Chain Directors’ Briefing. (5 October 2016), concerning the longevity of British business.
Ptak, co-founder of the US Demand Driven Institute, stated that Britain is behind the times in the way it drives its supply chain: ‘France is leading the world in Demand Driven Supply Chain, with the UK near the bottom of the pile.’
She stated that a recent Harvard study showed that one in three publicly owned US companies would be out of business in the next five years, and that the same threat could hang over British businesses if they did not make changes, resulting in a knock on effect to the economy and country as a whole.
Ptak explained to business leaders from Dyson, Lego, AB World Foods, John West and many others: ‘Companies have invested millions in supply chain forecasting systems, but forecasting is inaccurate leading to more money, time and energy being spent to correct these inaccuracies. This is not sustainable, businesses will close resulting in higher unemployment, and more people becoming reliant on the state.’
Demand Driven Adaptive Enterprise Management replaces the forecast model by a strategically designed operating model leveraging decoupling stock where needed within the supply chain, and topping them up in a predictable and repetitive sequence. Manufacturers ‘make to replace’ and suppliers ‘ship to replace’ triggered by actual demand, resulting in stable production, maximised revenue, significantly lower but right sized stocks and improved customer relations – all at the same time.
SCALA Consultancy is taking the lead in supporting UK businesses to make the change to a Demand Driven Supply Chain system. Led by ex-Cadbury Customer Logistics Director Keith Newton and Demand Driven expert Simon Eagle SCALA is working with a number of major names identifying and managing change projects with significant benefits in both inventory and service.
BT Supply Chain Director Brian Dooley explained how BT has introduced Demand Driven into the organisation following the success of a pilot scheme.
‘Two years ago the CFO and CEO of BT recognised that whatever we were doing with forecasting was not working and that changes needed to be made. Forecasting was either feast or famine, too much or too little inventory and the supply chain was constantly in a state of high alert firefighting. In the past four months since the introduction of Demand Driven, the changes have been impressive, we now produce what is needed, have a reduced inventory, costs are reduced and we can see a positive cash flow.’
Ptak remarked: ‘Businesses need to make changes; Demand Driven is not a totally new idea, it builds on all the relevant things that were done earlier but introduces innovation to enable a company to sense changes in market demand and adapt planning and production – in real time. What is needed is for business leaders to change their beliefs – just because they’ve been doing it one way for years doesn’t mean it’s the correct way. It’s all about changing our “thoughtware”, then common sense will become common practice.’