The “Great Divide” as referred to by Peter Drucker is the perennial issue of disconnect between Demand and Supply side within organizations.
Companies are trapped in a pattern of reacting to the whims of the marketplace without developing a proactively designed supply capacity. Curiously enough, such companies are often the victims of their own success — marketing programs that are not integrated with supply plans end up creating more demand than the company can fulfill. To create a more efficient and effective business model, companies must acknowledge that they need to integrate Demand and Supply Systems. This is an important concept of Supply Chain Management to understand and master.
Addressing The “Great Divide”
The disconnect between demand generation and supply fulfillment activities have made organizations suffer consequences of conflicting objectives and sub-optimal resource allocation. For example, discord between Sales and Production teams within an organization inevitably leads to sub-optimal resourcing decisions, customer dissatisfaction and loss of business opportunities.
Studies conducted on successful organizations which bridged the gap between Supply and Demand side reveals the following underlying realities.
- Value requirements often vary significantly across customers or segments of choice, demanding cost efficiency in some cases and product and service differentiation in others.
- Unlike Sales, which has learned to tailor its offerings to the customer, the operational side of the enterprise is often incapable of altering its service proposition.
The 5 Stages of Successful Supply Demand Integration
Focused research and studies on the subject across various organizations through multiple industries, makes it evident that organizations which got their Supply and Demand successfully integrated goes to 5 stages.
Stage 1: Develop a value focus — Senior leaders must cultivate a focus on creating value for the organization and for customers.
Stage 2: Share knowledge across the organization — Managers must work on building inter-functional collaboration within the company, building external collaboration with Supply Chain partners and adopting technology that facilitates collaboration.
Stage 3: Allocate resources strategically — Once the entire organization shares the same set of facts, the company can then begin to make more thoughtful analysis of where and where-not to allocate resources based on which customers deserve priority.
Stage 4: Learn to walk the talk — Executives at this stage make individuals accountable not just for their own unit’s performance but for the overall performance of the organization.
Dell serves as an early example of successfully implemented Demand and Supply Integration.
In 1999, one customer (a leading author) ordered a computer three weeks before Christmas. It was a gift for his sons, and as such, he had a very specific time frame in which to receive it. So when he received a confirmation email stating that the computer would be ready on February 16, 2000, he replied that he needed the computer much earlier. A service representative researched the delay and explained that the 400 megahertz Pentium chip that he had ordered was particularly popular and, as a result, was backlogged. Rather than leaving a customer dissatisfied, the service rep suggested a way around the supply chain bottleneck. For an additional $50, Dell could upgrade the Pentium chip and ship the computer within a week. The author readily agreed, and the computer was received well before December 25.
The customer’s needs had been met, and at a price that was reasonable to him.
Interested in gaining more understanding of these 5 steps to successful Supply and Demand Integration? You can learn more and download an editable PowerPoint about Supply and Demand Integration here on the Flevy documents marketplace.
Do You Find Value in This Framework?
You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library. FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives. Here’s what some have to say:
“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions. I strongly recommend FlevyPro to any consultant serious about success.”
– Bill Branson, Founder at Strategic Business Architects
“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power. For us, it is an invaluable resource to increase our impact and value.”
– David Coloma, Consulting Area Manager at Cynertia Consulting
“As a small business owner, the resource material available from FlevyPro has proven to be invaluable. The ability to search for material on demand based our project events and client requirements was great for me and proved very beneficial to my clients. Importantly, being able to easily edit and tailor the material for specific purposes helped us to make presentations, knowledge sharing, and toolkit development, which formed part of the overall program collateral. While FlevyPro contains resource material that any consultancy, project or delivery firm must have, it is an essential part of a small firm or independent consultant’s toolbox.”
– Michael Duff, Managing Director at Change Strategy (UK)
“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients. In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over! The quality of the decks available allows me to punch way above my weight — it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”
– Roderick Cameron, Founding Partner at SGFE Ltd
“Several times a month, I browse FlevyPro for presentations relevant to the job challenge I have (I am a consultant). When the subject requires it, I explore further and buy from the Flevy Marketplace. On all occasions, I read them, analyze them. I take the most relevant and applicable ideas for my work; and, of course, all this translates to my and my clients’ benefits.”
– Omar Hernán Montes Parra, CEO at Quantum SFE