Manufacturers & Distributors ARTICLE -
Supply vs. Demand
Technology May Change Manufacturing Models
Target Audience: Manufacturing and Distributing Companies, M&D Industry, Manufacturing Distributors
Manufacturing is showing signs of recovery following the down economy of recent years, but traditional supply-driven business models may not survive the resurgence.
Global competition, increased demand for customized products, and the need for speed and flexibility are causing manufacturers to turn to demand-driven processes. Software providers are responding with innovative, demand-driven programs designed to meet manufacturers’ focus on bottom-line gains rather than the top-line growth that was paramount in the past.
What Is Demand-Driven Manufacturing?
As its name implies, demand-driven manufacturing means that customer demand drives manufacturing operations. Traditionally, manufacturers have made products to meet their customer requirement projections.
If they expected customers to demand faster order fulfillment, manufacturers simply increased their inventory. If they anticipated increased demand for a particular product, they made more of that product, knowing that an aggressive sales promotion could help move it off their warehouse shelves.
With a demand-driven model, by contrast, manufacturers build to customers’ requirements, pulling from their suppliers as needed to meet actual demand rather than forecasts. Manufacturers accomplish this by using technology that provides real-time information on customer orders — information that can drive production schedules and material orders to reduce reliance on high inventory stocks.
Integrated programs that can assure a consistent, accurate and efficient flow of information across the entire enterprise allow companies to work from up-to-date customer demand and automatically schedule daily production accordingly.
Are Results Sustainable?
Proponents of this technology say it can formalize and scale lean manufacturing efforts to create sustainable results that would otherwise be impossible with traditional manufacturing methods. Manufacturers that have worked to optimize their inventory levels say their lean manufacturing and other quality and process streamlining initiatives are beneficial.
The President’s Council of Advisors on Science and Technology says more than 80% of the productivity growth in the manufacturing sector in recent years has been because of technology. But this doesn’t mean lean manufacturing is on its way out. It may well suggest manufacturers are recognizing the value technology can add to the cost reduction and waste elimination efforts that are at the heart of lean manufacturing.
What Does The Future Hold?
As the demand for custom products increases, manufacturers are turning to demand-driven processes. Because these processes require speed and flexibility, manufacturers are using demand-driven programs designed to meet their focus on profit rather than the top-line growth that was previously important.
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