How Process Manufacturers Deal with Demand Fluctuations

Best-in-Class companies are twice as likely than all others to be able to convert forecasts at product category / family level down to the SKU level.

Process industries are 1.5 times more likely than all other companies to be able to forecast based on attribute, according to a new report from Aberdeen Group. The study, titled "Demand Management in Process Industries: Strategies for Being Demand Driven in a Globalized Economy" examines how process manufacturers must increase responsiveness to deal with demand fluctuations in an unstable market.

"Supply chain executives in the process industry sector are primarily concerned with being able to drive volumes in accordance with previously established plans, as well as with maximizing the utilization of assets," said Nari Viswanathan, vice president/principal analyst with Aberdeen. "Asset intensive manufacturing operations is a key common theme across process industries. These volumes are determined at the beginning of the year and the channel and sales organizations march to these goals. Volume, however, cannot be looked at as an end unto itself; it must be considered the means by which the business plans for profitability, market share, Return on Invested Capital (ROIC), or other return on investment measures. Demand management processes should be then adjusted to attain these goals through becoming as close to customer demand as possible in their environment."

Findings in the study show that firms classified as Best-in-Class are:

  • Two-times more likely than all others to be able to convert forecasts at product category / family level down to the SKU level;
  • Three-times more likely than all others to be able to create single demand forecasts with inputs from multiple roles within the organization; and
  • Five-times more likely than all others to be able to measure end to end planning lead times.

"In today's tough economy it is especially important for organizations to be responsive to customers' demands, and an important tool in doing this is an effective forecast,"said Sujit Singh, Supply Chain Consultants' chief operating officer. The study was co-sponsored by Supply Chain Consultants, a provider of supply chain software solutions.

For a copy of the report visit: http://www.aberdeen.com/link/sponsor.asp?cid=5294.

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