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The Responsiveness Advantage– Gain an operating advantage with this elusive capability-set
Based on over 2 decades of work with Operations teams at large and smaller, dynamic companies, this Report introduces a key opportunity to build a new operating advantage
Zyom provides a set of capabilities for Product Companies to achieve Demand Responsiveness harmonizing it with Profitable Operations across lifecycles.
Demand Responsiveness results in:
- Superior ability to clearly understand and fulfill changing Channel demand signals – while making profit optimizing decisions that is sensitive to different lifecycle phases in Real-Time
- Creative collaboration across functions and partners which catalyzes growth with profitability
What is Demand Responsive Operations?
The objective of Product Companies: Maximize profitability of products across lifecycles (the Company’s development or maturity cycle) while achieving target shipment volumes & growth
To achieve this, Product Companies need to:
- Respond quickly & reliably to demand across all channels (Distributors, Resellers, end customers)
- Fulfill demand in a way which supports revenue growth while balancing it with profitability
Only Companies with Demand Responsive Operations can do this. Such Companies can
a) Identify new Demand or changes in Demand
b) Capture Demand upside (& mitigate downside risks)
c) Fulfill Customer & Channel Demand quickly and intelligently
However, companies cannot achieve Demand Responsive Operations in isolation. They need a key catalyst - Value Networks that are Demand Responsive
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| Impact area | Metrics | Financial/ Macro Impact |
|---|---|---|
| Customer service | Ship to First Commit | Short & Long term Revenue (Customer Lifetime Value) |
| Channel Inventory | Fill rate; Inventory returns | Short-term Revenue; Preferred Vendor Status |
| Network Inventory | Days of Supply | Cash to Cash Cycle; Total Working Capital |
| Fulfillment | Fulfillment cycle time; Expediting cost | Cash to Cash Cycle; End-to-end Fulfillment cost; Marginal profit |
Why is Demand Responsiveness critical?
Companies that sell through Distribution or other Indirect Channels struggle to connect the dots between the Channel Demand signals and execution across the Value Network. Often, this is due to limited Business System capabilities to support Operations, or process gaps, or a mix of the two.
Companies with Demand Responsive Value Networks can connect the dots in near real-time between Channel Demand and the build signals that their Supply Networks march to. This is how:
- ‘Separate the wheat from the chaff’ in demand signals & changes across all Channels & customers
- Respond quickly and intelligently, both internally and with partners/customers - to demand changes (or supply constraints) that can impact Operations
- Ensure decisions and follow-through execution optimizes profitable revenue and is sensitive to lifecycles
Companies that fail to be Demand Responsive experience Unpredictable Channel availability of their products, higher ‘cost of response’ and diminishing margins, eventually eroding demand and diminishing its competitive standing.
The Big Gap(s): Demand Responsive Operations vs. Not
Following are a subset of scenarios that show how Demand Responsive Value Networks are different from others:
| Reactive | Demand Responsive |
|---|---|
|
Scenario - Demand dips suddenly for Product(s) Response- Cancel Supply P.O.s! Too late in x-functional synch-up Impact - Huge unplanned inventory overhang of old products |
Scenario - Demand dips suddenly for Product(s) Response- Proactive alert across functions? Planned or unplanned obsolescence? Impact - Inventory obsolescence within target |
|
Scenario - Unplanned increase in Channel Demand (for a mix of products) Response- Rework excess? Expedite! Impact - Products Shortages, Unable to serve demand upside; Major ‘upside’ deal “lost”; Competitor gets ‘toe-hold’ into Major customer account |
Scenario - Unplanned increase in Channel Demand (for a mix of products)
Response- Available to Ship? Real time options analysis? Impact - Fulfill “critical” portion of upside without “diving catches” (expediting, other "heroics" & added costs to meet upside); Accurate commit for ‘to-be’ fulfilled portion Retained customer ‘goodwill’; Competitor kept at margins |