The first step to understand a demand driven supply chain planning is to understand what it is not. A supply chain cannot be effective without customers. It cannot be successful without a competitive price for the items you produce and ship. And it certainly cannot work properly unless you are developing products to sell in bulk to customers, which requires you to know where your customers are, how they choose your products, and how they order them.
Now let us return to the original question: what is a supply chain? In simple terms, it is a map of where you want your customers to be at any given time. In more complex terms, it is a map of where your customers are going to be at any given time. Any successful business takes both of these into consideration and combines them into one robust plan. When you think about it, the way your customers plan for you is almost as important as what you plan for them.
The key to a successful demand-driven supply chain is knowing where your customer is. If you go door-to-door or cold-calling, you will only get to know what your potential customer wants to buy. You can ask a hundred questions, try to convince a hundred people, and still only be able to give your prospects the broadest answer possible. There is no better way to understand your customers' needs than asking them, so that you can give them the best answer possible.
To understand your customers, then, you must also understand where your potential customers are, and where they are going. This is a process that span both physical and logical aspects of the supply chain, but both are equally important. Physical factors include the location of your manufacturing facility, the proximity to your customers, the ease of accessing your facility, and even the infrastructure in place. Logical factors include things like the speed of shipping times, the safety and security of your shipping route, and even the reputation of your shippers.
In order to understand the relationship between these two concepts, you first need to understand the concept of a demand-driven supply chain. In this context, you can think of it as the standard supply chain, just simplified. This chain has three phases: discovery, sourcing, and production. At each stage, you have the ability to decide what resources you should work with, and at what point you should stop working with a particular supplier. This is essentially the entire point of the supply chain; it is the point at which you say, "Okay, I have all of the materials I need, but I need more."
Once you have found a supplier for the goods or services you need, your next step is to determine how to get these goods or services to your customers. This is where the supply chain starts to take effect. In this stage, you have a number of options. For example, you can ship the goods yourself, or you can hire a transport company to do this for you. Depending on the scale of your operation and the nature of the goods you are distributing, you may choose to ship everything yourself, or you may prefer to partner with a third party logistics provider.
Shipping companies are generally comprised of freight forwarders, customs brokers, logistics providers, and tankers; this is the third phase. All three of these entities play important roles in the process of moving resources from discovery, sourcing, and production to distribution and final destination. The logistics company that is ultimately located at the destination stage takes over the role of allocating the resources available to the companies. Each of the entities mentioned above has a specific number of tasks they are responsible for; their order of importance will vary depending on the scale of the organization and the specific resources they must complete. At this point, you will find that there is a great deal of interdependence among the various entities involved in this process.
The fourth and final phase of what is a demand-driven supply chain is the collection and disposition of product. Once products have been shipped, they are stored either in a facility owned by the logistics provider or in a location that is leased from a carrier that is an integral part of the supply chain. This storage phase is usually referred to as warehousing. This portion of the chain is often the most challenging; it requires adequate space to store products, equipment, and storage spaces, as well as staff to monitor and handle the material as it moves through the system. This is one of the reasons that many companies chose to outsource in the first place.