Today, manufacturing is a global activity. As supply chain management (SCM) becomes more prevalent in this industry, process manufacturers need to know what raw materials, or ingredients, are available in inventory and when they are needed, since sourcing these ingredients is a complex process.
Demand management software has been developed so that it can be integrated within the supply chain in order to help manufacturers meet sales forecast objectives and increase customer satisfaction. Demand management software also helps manufacturers deal with customers’ expectations of what can be produced and how much will be available.
Process manufacturers are seeing other issues as well:
* increasing manufacturing costs in the process industry, and the need to get a handle on these costs
* difficulty in measuring sales forecasts accurately due to issues of seasonality, changing customer demand, and availability of materials if no demand planning software is in place
* diminished visibility of data and materials across the entire supply chain if systems are not integrated together, leaving departments to rely on previous forecasts to manufacture the product(s)
* longer lead times if proper procurement practices are not taken, and either too much of the wrong inventory or not enough of the right inventory is in the warehouse, increasing inventory holding costs
* decreased customer satisfaction as responsiveness to changing customer demands decreases
In order to combat the above issues, attribute-based demand planning (ABDP) has been developed within demand management software—an approach based on just in time (JIT) inventory methods and demand management software. ABDP can reduce inventory levels and supply chain connections, as well as allow organizations to become adaptable to changing customer demands.
The main goal of ABDP is to eliminate the holding of inventory as much as possible, which is achieved by planning for materials needed based on attributes as opposed to the whole product itself. This means that if an ingredient or part with a particular specification is needed, then the product demand will be triggered in the system, and the material needed will be ordered. Normally within demand management for manufacturing, the component is ordered based on historical data as opposed to the need for that particular item.
Demand Management and ABDP
Demand management (DM), or demand planning, is a method that gives managers the ability to forecast needed inventory stock, parts, or components within the supply chain in order to manufacture a final good. DM helps to manage a firm’s inventory by way of setting minimum and maximum levels of stock, and letting the system indicate to the appropriate managers what to buy and if the stock is needed either immediately or in the next period.
ABDP takes the above process one step further. It is, in essence, a method of lean inventory management that focuses on the next level down. Using a DM software solution, a manager can not only forecast how many products will be needed, but also which type of components will be needed to produce the products, as well as if any modifications are to be made to those components.
With ABDP, the system can accurately decide what stock is needed, as well as when it is needed, in order to adapt to changes in customer demands—a capability that will invariably increase the manufacturer’s bottom line by reducing inventory holding costs.
Demand management software has been developed so that it can be integrated within the supply chain in order to help manufacturers meet sales forecast objectives and increase customer satisfaction. Demand management software also helps manufacturers deal with customers’ expectations of what can be produced and how much will be available.
Process manufacturers are seeing other issues as well:
* increasing manufacturing costs in the process industry, and the need to get a handle on these costs
* difficulty in measuring sales forecasts accurately due to issues of seasonality, changing customer demand, and availability of materials if no demand planning software is in place
* diminished visibility of data and materials across the entire supply chain if systems are not integrated together, leaving departments to rely on previous forecasts to manufacture the product(s)
* longer lead times if proper procurement practices are not taken, and either too much of the wrong inventory or not enough of the right inventory is in the warehouse, increasing inventory holding costs
* decreased customer satisfaction as responsiveness to changing customer demands decreases
In order to combat the above issues, attribute-based demand planning (ABDP) has been developed within demand management software—an approach based on just in time (JIT) inventory methods and demand management software. ABDP can reduce inventory levels and supply chain connections, as well as allow organizations to become adaptable to changing customer demands.
The main goal of ABDP is to eliminate the holding of inventory as much as possible, which is achieved by planning for materials needed based on attributes as opposed to the whole product itself. This means that if an ingredient or part with a particular specification is needed, then the product demand will be triggered in the system, and the material needed will be ordered. Normally within demand management for manufacturing, the component is ordered based on historical data as opposed to the need for that particular item.
Demand Management and ABDP
Demand management (DM), or demand planning, is a method that gives managers the ability to forecast needed inventory stock, parts, or components within the supply chain in order to manufacture a final good. DM helps to manage a firm’s inventory by way of setting minimum and maximum levels of stock, and letting the system indicate to the appropriate managers what to buy and if the stock is needed either immediately or in the next period.
ABDP takes the above process one step further. It is, in essence, a method of lean inventory management that focuses on the next level down. Using a DM software solution, a manager can not only forecast how many products will be needed, but also which type of components will be needed to produce the products, as well as if any modifications are to be made to those components.
With ABDP, the system can accurately decide what stock is needed, as well as when it is needed, in order to adapt to changes in customer demands—a capability that will invariably increase the manufacturer’s bottom line by reducing inventory holding costs.
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