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Become A Demand-Driven CPG Manufacturer

The seemingly easy paradigm shift from the supply and forecast based manufacturing to a complete demand and analytical driven manufacturing fundamentally calls for overcoming some deep rooted challenges, including set procedures and business outlook.

The first step(s) towards building a strong and flexible demand driven manufacturing model definitely starts by comprehending the need for this model and more importantly understanding the nuances of being fully demand-driven. It starts with asking the question:

Is your business truly demand-driven?

The most defeating idea when coming to making that transformation is, businesses being under the impression that they are actually demand-driven as they cater to the changing demands of their customers. For sure, every business is focused to meet the demands of its customers, but the fundamental change comes by overhauling the same idea with added intelligence, enabling technology, correlating information, and striking a clean demand and supply balance, by creating demand-sensing manufacturing and supply models.

Open up all sources of data and connect the gaps

It’s all about acquiring varied customer and product related information, both external and internal, and bringing it onto a smart technology platform where it can be analysed. This will give you a clearer picture of the existing and expected demand and related supply. This requires businesses to build necessary technology frameworks and include newer information driving channels and procedures that can yield the necessary results.

Conditioning the supply chain loop

How and where you start is the key aspect in the process of transforming your business. The challenge here is engaging multiple parties involved in the whole supply chain loop and getting them conditioned to the minor and major changes and tweaks that you are intending as part of turning fully demand-driven.

As per CGT/RIS Shared Data Study, 44% of retailers say suppliers are leveraging shared data effectively, but some retailers still don’t see data sharing as a process that is good for both suppliers and themselves.

Long-term planning

It’s natural for most businesses to opt for a small and sedate start to check the effectiveness of demand-driven tactics rather than going all out. On the face of it, adhering to a pilot project is safe but this brings in significant impediments. For instance, pilot projects are normally tested on a small scale and more importantly it will not have the support of all the stakeholders. This leads to them being totally unaware to the whole process, leading to lack of appreciation and support. So, to drive in the benefits of demand-driven model you should have a long-term plan which is backed up by all the stakeholders.

Managing lots of data

The rudimentary change for ushering in demand-driven manufacturing is the need to collect, harmonize, maintain, and retrieve loads of information smartly and efficiently. This is where traditional systems fail and this calls for addressing major concerns like optimizing existing technology, data collection channels and methods, work methodology, flow of information, and so on.

Ownership of data

The initial reliance on third-party data and other collected information from various sources may, at times, prove to be both laborious and less reliable or generic. This is where most companies in the path to embracing demand-driven initiatives may feel dejected or left wanting for more. This gives rise to the need of having a dedicated Demand Signal Repository (DSR) so that you get a reliable and effective platform for generating insights.

Where to start?

The key for a full stretch dive into demand-driven manufacturing model is to establish a Demand Signal Management Platform, which can give you real-time information on the demands of your customers. It includes various insights that deliver periodic conclusions and factual data regarding the current and expected demand from your customer base.

As per Gartner, a business working on demand-driven model holds one-third less inventory, has 20% better perfect order performance, and has lower supply chain costs equal to 5% of revenue.

So, the key is to think long-term and steadily plan for Demand Signal Management for your business which can hold the core content for demand signalling.

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Author- Simran Tayal

Simran Tayal
Marketing Manager at Manthan with a passion for new trends in Retail and CPG technology. Simran has 6+ years of experience in Marketing Retail and CPG technology. Google+ Profile

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