Every business production planner and operations manager understands why effective resource management is a critical component of success. Despite this, even global brands struggle to manage resources in a way that ensures product demand is met consistently.
Take for example Procter & Gamble’s U.S. launch of its Tide pods in 2012.
The initial launch date was scheduled for the third quarter of 2011, but the brand postponed the launch until the following year as it needed extra time to increase production to meet customer demands. Commentators identified that this weakened the brand’s market position and gave competitors an opportunity to derail the launch.
This is just one example of why traditional approaches to resource planning are often ineffective. Instead of manufacturing product in line with actual consumer demand, many traditional manufacturing philosophies promote the use of forecasts to predict demand. As P&G’s launch shows, these forecasts are often inaccurate.
One solution that managers might consider in this case is DDMRP: demand-driven material resource planning.
Taking a demand-driven approach is simple in principle but requires a fundamental shift in business culture and mentality to fulfil its potential. Managers and planners will have to open their minds to the possibility that the traditional methods are often incompatible with modern markets.
Most operations managers continue to manage production using old models that are ineffective for modern consumer demand. Instead of using genuine demand to pull products through the supply chain, managers still use demand forecasting and material requirements planning (MRP) principles to push products to market — irrespective of actual demand.
As a result, there is often a great disparity between actual customer demand and that predicted by forecasting, which results in wasted stock or underproduction.
A solution like DDMRP allows production planners to use ERP systems, such as Microsoft Dynamics 365, more effectively to manage demand, rather than respond to speculative requirements. This gives planners more control over the supply chain and allows for greater business agility, as well as eliminating the risk of supply shortages.
Production planners that want to manage, and not be managed by, market volatility and customer demand should follow suit and experience the difference.
SHEA Global offers DDMRP expertise and other solutions for resource management planning. Contact us today to find the right solution for your business.