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Importance of a demand-driven approach to supply chain in retail

July 13, 2022 - Team EdgeVerve

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Embracing a demand-driven approach that navigates the complete supply chain to the customer demand will help gain better sense and react to customers’ purchasing preferences and trending behavior. However, specific challenges include demand and competitive dynamics, patchy supply chains, and complicated logistics driving this consumer-driven approach. These roadblocks apply to all industries, but in retail, these blockades become more prominent.

Reimagining a retail operation from a traditional, supply-driven venture to one that is customer-centric and demand-driven is an extremely tough task but not impossible. The primary build block to this makeover method is the development and application of a demand-driven supply chain that acts in response and foresees the customer demand instead of responding to supplier inventory. However, regardless of various subsidies, many retailers still shy away from incorporating the demand-driven supply chain (sometimes called demand-driven supply network) strategy.

What is a demand-driven supply chain?

A demand-driven supply chain identifies customer demand signals. Then, it transmits those replacement demand signals to retailers and suppliers in real-time so that the demand can be acted upon instantly. However, if this supply chain planning process is not implemented, firms tend to overplay by pacing up their production levels or slowing down. This can lead to varying inventory levels, with the impact being unreasonable and inefficient.

Benefits of demand-driven supply chain in retail

Demand-driven supply chain benefits all the entities involved in the supply chain, from suppliers to retailers, manufacturers, and the end consumer. Here are a few benefits mentioned below:

Effective ways of demand-driven supply chain management in retail

Let us consider some of the ways of demand-driven supply chain management in retail that help businesses to respond to consumer demand signals on time.

  1. Real-time supply chain planning

When dealing with spreadsheets and ERP systems for planning, the organizations may rely on historical data, which lessens the adaptability factor. However, it is not at all a worry as one can follow the holistic method of supply chain management by using the TradeEdge platform as it is a real-time supply chain solution. Moreover, it offers accurate forecasts with its Demand Sensing solution.

  1. Unifying supply chain planning with enterprise planning

The next move is to link the traditionally siloed supply chain planning to operations, sales, and financial planning by orchestrating the short-term operational planning with the broader business planning activities so that one can make real-time updates to inventory estimates and supply. Connecting the planning processes allows business-wide collaboration.

  1. Anticipating the consumer demands

Most companies face the challenge of foreseeing what the customers want, when, and where they want? Again, this is where an efficient platform like the TradeEdge does the job with ease, as it allows end-to-end visibility across the supply chain by receiving the demand signals from the consumers. This enhances lead-time, profitability, and margins.

  1. Leveraging real-time data across supply chain

It is normal to see models become large and difficult to decipher, primarily because spreadsheets are the main planning tools. Thus, by integrating an efficient platform, TradeEdge can manage high volumes of real-time data. It helps in planning more accurately with minimum threats of over or under-stock inventory.

  1. Be accommodating enough to cope with change

Replacing old technology with the latest one has become the norm in the transformational world. Hence, to leverage investments, organizations should redesign the complete process to exploit all the new available prospects by embracing an effective demand-driven supply chain management platform like the TradeEdge.

Future scope of demand-driven supply chain management

Emerging markets have immense potential for consumer product companies. However, there are challenges in the retail execution due to scratchy supply chains and limited visibility. As a result, a well-laid down strategy to design a demand-driven supply network (DDSN) in the wake of evolving solutions with the correct application procedure can assist overcome all these obstacles. Furthermore, an efficient DDSN facilitates clear visibility into consumer demands and behavior, accurate demand forecasting, and efficient product life cycle management. Hence, it is fair to conclude that the retail supply chain will flourish in the future if a demand-driven supply chain solution is applied.

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