The demand driven enterprise
June 9, 2020
June 9, 2020
The Aerospace and Defense industry is grappling with disruptive forces—from market developments to technology innovations to the effects of unforeseen shocks. For the supply chain function, the virtual lifeline to humanity, the criticality of maintaining operations and outmaneuvering uncertainty is heightened during these times. Global supply chains are being severely impacted along all dimensions of the value chain.
This comes on top of the major changes in how aerospace and defense companies interact with customers, suppliers and manufacturers. Elevated customer expectations, increased market volatility, new digital technologies and expanding data volumes have all massively increased supply chain complexity.
However, the way supply chains are managed and run has not kept pace with the challenges.
The big picture? Supply chain leaders need better visibility into multilevel supply chains, ensuring fluid operations between all internal players. They also need more control over critical suppliers, securing on-time delivery, in the right quantities, to minimize the risk of disruption.
Supply chains need to shift from a focus on cost, cash and service to a new paradigm based on the speed of material flow and real-time information.
Demand-driven material requirements planning (DDMRP) is an innovative solution that disrupts traditional approaches, helping planners reimagine how to best serve the flow generated by demand orders between different points in the supply chain.
Under this model, the supply chain is divided into multiple interdependent entities, each with its own MRP run. The connectors between these entities are inventory buffers that act as shock-absorbers to handle variability and protect the flow.
These buffers are placed, for example, at the end of production processes for parts with long lead times or which create bottlenecks. They can also be placed on critical sub-assemblies (or those with long lead times), on critical parts whose suppliers have frequent quality issues, and/or on parts with complex supply processes.
DDMRP places dynamic buffers that react to demand orders, promoting flow throughout the system.
Thanks to its dynamic buffers, DDMRP helps ensure service is more reliable, revenue is maximized, and inventories are minimized. Additionally, it keeps expenses to a minimum and ensures cash flow follows the rate of product flow to market demand.
Demand-driven enterprises enjoy reduced overall lead-times for end-product production. They get better inventory control and stabilization of flows between plants/suppliers, as well as a reduced risk of stock shortages and supply disruption. Decision making and forecasting are transformed with increased visibility over complex sourcing processes and real-time information on demand between plants.
The enterprise acquires the ability to manage variability rather than trying to synchronize complex and dynamic environments.
SAP enables the demand-driven enterprise and supports DDMRP through a comprehensive suite of solutions, including both SAP Integrated Business Planning (IBP) and SAP S/4HANA®. Some of these solutions have been co-developed with Accenture, such as DDMRP calculations and execution in SAP S/4HANA with supply chain extended manufacturing.
In addition, SAP S/4HANA Finance helps companies move to real-time finance and advanced finance analytics, providing a simple way to adapt financial KPIs and follow up a demand-driven transformation. And SAP Ariba® for procurement helps drive savings and enable supplier collaboration along the entire source-to-settle process.
A DDMRP transformation requires numerous, often jointly executed activities to be seamlessly coordinated. Accenture can help your business align all the moving parts and accelerate the journey:
Thanks to our end-to-end capabilities, our deep SAP knowledge, plus our collaboration on SAP DDMRP development, we are uniquely positioned to help you choose the right tailor-made solution for your company’s own demand-driven transformation.