Supply chains should consider customer influence

26 March 2007
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27 March 2007 | Paul Snell

Buyers have been told to look more closely at the way customer demand affects their supply chain.

Kevin O'Marah, senior vice-president of strategic research at AMR Research, told delegates at yesterday's Extended Supply Chain 2007 that customers are becoming increasingly influential in the way supply chains operate.

He added buyers could use this power to mitigate some of the risks of supply chain planning - such as surplus stock - by offering customers discounts or promotions on products.

"If you know you will have a problem in the supply chain, use demand planning to manage it," he said.

O'Marah emphasised supply chains had moved away from a linear model, where products move from the factory to the retail shelf in a straight line. Instead, he said, companies should try to employ the "demand driven supply chain". In this model, buyers aim to balance the needs of suppliers with the influences of demand and ensure there is healthy innovation in their products.

"It was all about pushing widgets out the door," said O'Marah. "It's now about something different. [A demand driven supply chain] is useful, but can be hard to implement."



SMmar2007

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