What is Demand Responsiveness?

The objective of Product Companies is:
Maximize the profitability of products and services across lifecycles while achieving target shipment volumes

• Demand Responsiveness
• Cost Competitiveness

Companies with Demand Responsive Operations are able to identify, capture and service profitable demand intelligently and quickly.

Companies that sell through multiple channels (Direct & Indirect), require Demand Responsive Supply Networks to respond quickly and intelligently to significant demand changes or shifts, while ensuring that key operational metrics are achieved or improved upon. In case of supply changes, Product companies with Demand Responsive Operations can respond fast and smart and also ensure that the follow-on execution is highly responsive.

By accurately estimating ‘Total' and ‘Marginal Cost’ and taking these and other target metrics into account when making decisions or acting on it, Operations can ensure that the Response intelligently balances Cost. This has a direct, positive impact on the following metrics-

Depending on the lifecycle phase of products, the set of management metrics need to be tailored or the emphasis modified.

Companies that can be Demand Responsive while keeping ongoing Operational costs competitive can achieve sustainable profitability across the lifecycle of its products.

Why is Demand Responsiveness critical?

Companies that sell through Distribution or other Indirect Channels struggle to connect the dots between the signal from Sales Channel (‘Channel Demand’) and the back-end supply chain execution. Often, this is due to inadequate IT Systems' capabilities to support Operations. In other cases, it can be due to gaps in processes or a mix of the two.

Demand Responsive Companies can quickly connect the dots between Channel Demand and the build signals that their Supply Networks march to. Companies that can be Demand Responsive while being simultaneously cost-competitive can achieve this:

• ‘Separate the wheat from the chaff’ in understanding demand signals & changes from the Sales channels
• Respond quickly and intelligently to significant demand or supply changes that can impact Operations
• Ensure decisions and follow-through execution maximizes profitable revenue potential across lifecycles (we call this ‘Demand Responsive Execution’)

Companies that fail to be Demand Responsive experience unpredictable availability of their products in the Channels and a higher ‘cost of response’ – resulting in the downward spiral of diminishing margins, eventually eroding product demand and diminishing the company’s competitive standing the marketplace.

The Big Gap(s)

Our studies have shown that while several companies have made strides in improving Responsiveness, serious gaps still exist in achieving Demand Responsiveness – often due to insufficient IT capabilities, insufficient process alignment or both.

Fewer examples exist of companies that have deployed enabling Systems capabilities that support Demand Responsiveness while balancing it with the needs of being Cost Competitive.

So, how do a ‘Demand Responsive’ company’s Operations differ from others? Following scenarios show how:

While these are only a sub-set of scenarios that companies face, the Impact is clear – Responsiveness, even executed efficiently, cannot save a company from significant, avoidable additional costs (E&O, Rework, etc.) and results in poor agility to respond to competitive threats. Lower cross-functional effectiveness is often one of the symptoms.

Demand Responsiveness on the other hand not only ensures smarter management of Total Cost but also results in superior ability to clearly understand and satisfy Channel demand signals – while being sensitive to the different lifecycle phases. Such companies enjoy creative collaboration across functions and partners.

Zyom provides a set of capabilities for Product Companies to achieve Demand Responsiveness while harmonizing it with the needs of being Cost competitive across lifecycles.