December 22, 2016

What is Demand-Driven Manufacturing?

Demand-Driven Manufacturing is a method of manufacturing where production is based on actual customer orders (demand) rather than a forecast.

Gartner estimates that 90% of manufacturers who are not demand-driven, want to be.

This is likely due to the many benefits Demand-Driven Manufacturing offers, including greater customer satisfaction.

Demand-Driven Manufacturing as a method that incorporates the best of Lean Manufacturing, Theory of Constraints (TOC) and Six Sigma principles.

It describes production that is based on actual customer demand with an aim to synchronize everything (people, method, materials, machines, and information) in order to drive flow.

This process is accelerated by technology that automates, digitizes data and connects every function within the demand-driven organization and to every layer of the supply chain. The key components are synchronization and flow.

Demand-Driven Manufacturing is associated with “Response Planning” or “Pull” manufacturing and supply chain methods.

The two main continuous improvement approaches that advocate the Demand/Pull method are Lean Manufacturing and Constraints Management.

Lean Manufacturing, Constraints Management and Lean Six Sigma believe that managing variability is of vital importance to any continuous improvement effort.

Modern Demand-Driven Manufacturers are today’s truly Lean thinkers.

While they are continuously improving, they are also innovating.

Modern Demand-Driven Manufacturers realize that this combination not only gives them an advantage in the marketplace, but it drives their efforts to work smarter, more profitably and exceed expectations.

Modern Demand-Driven Manufacturers embrace technology, but with a different lens. Solutions, not just systems, drive progress.

The 2017 Top Ten Trends for Modern Demand-Driven Manufacturing is based on interactions with hundreds of manufacturers and industry experts – addressing challenges, supporting innovation and introducing technologies.

The constant, key themes that rise to the top are digitization, synchronization and visibility.

The 2017 Top Ten Trends for Modern Demand-Driven Manufacturing
1. Digitizing the Shop Floor
While there are hardware devices that work to normalize data, Modern Demand-Driven Manufacturers are looking toward lighter weight, more flexible – and this is important – scalable software systems that can normalize data, make it accessible, and help effectively transform that aggregated data into performance-improving information.

2. Supply Chain Collaboration and Visibility
Supply Chain Visibility (SCV) is increasingly becoming an area of research focus for Gartner, stating that SCV adoption is no longer a “nice to have” for any manufacturer. Adoption rates are growing across industry segments with industrial manufacturing leading the way at nearly a 20% rate.2 Gartner also suggests that visibility initiatives should be closely aligned with business drivers and risk management to lend focus and realize the greatest initial return.

3. Multi-Plant, Enterprise Wide Visibility
Visibility at all levels is becoming increasingly critical for innovation, competitive value, synchronizing activities, traceability, production flow – and the list goes on. As customer and customization demands increase, more Modern Demand-Driven Manufacturers are relying on greater visibility at the value stream, supply chain, or enterprise levels to drive increased performance.

4. Smart Data, Smart Decisions – Managing Big and Not So Big Data
Business intelligence tools have been around for a while, but for many, you need to rely on a constrained IT resource to get the reports needed. Modern Demand-Driven Manufacturers require easy to use tools developed for manufacturing. Tools that empower everyone in the organization to conduct their own analyses and create their own reports and dashboards with data aggregated from multiple sources.

5. Automating Manual Processes
The digitization of manufacturing certainly automates the arduous task of data collection, aggregation and sharing across machines and systems. There is, however, a surprising number of manufacturers still using spreadsheets for production scheduling and manual Kanban cards for inventory replenishment. Modern Demand-Driven Manufacturers automate these manual activities and earn a quick return on their technology investment.

6. Real-Time Communication Processes
A single version of the truth generates a more consistent, Lean and waste free supply chain. Another option for enabling this is through a visual factory information system that can connect to any data source and display graphical visualizations configurable to the individual user, work center, plant or multi-plant/enterprise level. Order and machine status, system alerts, stock buffer, KPIs and more can be made accessible to everyone; anytime, anywhere, providing a single source for real-time information.

7. Compliance and Traceability
Modern Demand-Driven Manufacturers keep a tight rein on their product genealogy through workflow systems that track and trace production routing and process flows using serialization. Such workflow systems are highly configurable to adjust as mandated requirements change – and digitized to easily pull data from other systems, including historians, asset management, inventory management and more.

8. Actionable Metrics
More Modern Demand-Driven Manufacturers are turning their focus toward actionable metrics grounded in Lean, constraints management and Six Sigma principles. Actionable metrics are operational indicators; select metrics that can be acted on to improve production flow and ultimately, throughput.

9. Solutions vs. Systems
As more technology options become available, more manufacturers seem to be wrestling between the value of investing in best of breed solutions that meet specific functional requirements versus large, multi-functional systems (think ERP, manufacturing execution system or MES, etc.).

10. Cloud Technology; SaaS Delivery
Modern Demand-Driven Manufacturers are already looking to the Cloud to extend, or add value to existing legacy system investments. Rather than ripping and replacing large systems, these manufacturers are augmenting them with highly flexible, scalable and interoperable Cloud-enabled solutions that can be configured to work exactly how they need them to – without large customization fees. For many, these hybrid Cloud environments are becoming a popular way to validate the value proposition of Cloud computing.

Download: The 2017 Top Ten Trends in Modern Demand-Driven Manufacturing