Understanding Demand Flow Technology: How Real-Time Visibility of Customer Demand Can Benefit Your Business
Demand flow technology (DFT), also known as demand driven planning, is an operations approach that is transforming how many leading companies satisfy fluctuating customer needs.
By utilizing up to date demand signals from the marketplace, DFT enables more agile, efficient and customer centric processes from raw materials through delivery. Let’s take a deeper look at the principles and benefits of this innovative strategy.
What is Demand Flow Technology?
At its core, DFT centers operations around real time visibility into customer purchasing behavior.
Rather than relying on projections from the past, demand flow technology provides daily or even hourly updates on order volumes, inventory drawdowns, and point of sale transactions. This demand data is incorporated into production management and replenishment decisions to align internal activities seamlessly with external requirements.
Specifically, inventory locations and sales channels send “pull signals” to upstream elements like procurement, planning and manufacturing.
These demand signals guide replenishment amounts, batch sizes, and production schedules on an ongoing basis.
Where traditional production control systems favor supply push from long range forecasts, DFT creates a demand pull between steps.
Smaller, more frequent batches deliver materials and finished goods only as needed to fulfill current orders at each stage.
Another hallmark of demand flow is the use of physical or digital “kanban cards.” Kanban cards govern workflows, traveling with items and triggering actions. For example, as raw materials are pulled from a supermarket to make products according to discrete customer orders, the Kanban card alerts procurement to replenish stock once that job is complete.
This “drumbeat” from customers maintains continuous flow while avoiding surpluses, shortages or idleness.
Overall, DFT seeks to make every internal operation demand based rather than supply focused. By adapting daily to real world shifts in what, where and when customers purchase, companies can respond with unprecedented agility.
The Mechanics of Demand Flow
To implement demand flow effectively, significant preparation and strategic adjustments are involved.
Production control is not the only sphere impacted, demand driven methodologies also reverberate across all value chain functions.
At Toyota, for example, demand flow extends throughout the extended enterprise.
Tier one automotive suppliers employ kanban cards to maintain JIT delivery, while dealerships coordinate service schedules around demand signals too.
This type of collaborative, end to end alignment between customers and all business partners is key.
Implementing DFT also requires open book data sharing within organizations.
Sales data flows downstream to manufacturing operations, while procurement shares inbound estimates with order fulfillment teams. Cross functional communication keeps everyone synchronized to a common daily cadence.
Likewise, managers gain new roles under demand flow. Leaders coach employees on adaptability, problem solving and demand interpretation rather than simply monitoring tasks.
Frontline staff have increased autonomy to take immediate corrective actions when needed.
Executing DFT also involves analysis of current processes. Value stream mapping sheds light on non value added activities so redesign can eliminate waste.
IT infrastructure undergoes changes too, such as replacing siloed legacy systems with integrated demand driven solutions. Overall, adopting DFT constitutes a transformation that must start from the top down.
DFT in Action: Case Studies
Toyota: The Origins of Lean, Just-In-Time Production
Toyota is renowned for pioneering both lean manufacturing and demand flow technology as foundational operating principles. Daily production scheduling remains strictly demand driven to this day.
Rather than large batch sizes of mixed models speculatively built, Toyota’s Pre Production Model Line examines sales data overnight for the next day’s blueprint.
Short lead times and kanban cards keep works in progress extremely low, optimizing both productivity and process variation reduction.
Inventory turns have risen from single to double or triple digits through these techniques. With an incredible 93% of parts now arriving at JIT, Toyota’s successful demand driven operations stand as the gold standard for automotive lean.
Patagonia: Aligning Complex Global Supply Chain with Retail Sales
Another standout DFT practitioner is outdoor outfitter Patagonia. Despite worldwide manufacturing and retail locations, Patagonia exhibits impressive responsiveness.
Complex product categories like clothing demand this level of agility to match seasonal demand windows.
Patagonia deploys sophisticated demand planning software to sense shifts early.
As a non manufacturer, supply chain visibility still extends far upstream via kanban governed partnerships. Raw materials now originate from demand pull versus an annual sales forecast.
As a result, obsolescence plummeted from 15% to 1% of finished goods inventory. Patagonia’s B2C operation is now as tightly demand aligned as Toyota’s automotive build cycles, illustrating DFT’s viability even with geographically distributed, non standardized product service industries.
Adopting DFT: Considerations For Success
While the modern business case for DFT is compelling, its benefits only emerge through sustained effort and change management.
Key considerations include:
- Choosing an ERP partner with proven demand flow modules and consulting expertise
- Mapping processes before and after to pinpoint constraints
- Gaining C suite sponsorship for culture shifts
- Starting with a pilot program on simple SKUs and expanding
- Educating employees on interpretation rather than fulfilling plans
- Developing KPIs for ongoing monitoring, control and improvement
- Accepting imperfect responsiveness initially to continuously enhance system
FAQ
Q. What is DFT in manufacturing?
A. Design for testing or design for testability (DFT) consists of IC design techniques that add testability features to a hardware product design.
Q. What is the objective of the demand flow approach?
A. The objective is to link factory processes together in a flow and drive it to customer demand instead of to an internal forecast that is inherently inaccurate.
Q. What is the full form of DFT technology?
A. The DFT (Discrete Fourier Transform) is a form of Fourier analysis.
Q. What is the main purpose of DFT?
A. Calculate a signal’s frequency spectrum.
Q. Why is DFT required?
A. To ensure the smooth working of the product, chips are thoroughly checked and tested.
Conclusion
Demand flow technology has emerged as a leading edge strategy for synchronizing end to end operations with real market demands.
By giving daily precedence to accurate customer signals over forecasts, DFT enables companies to streamline costs, shorten lead times, and enhance customer satisfaction.
Although adoption requires investment and change management skills, case studies prove the approach can scale across manufacturing and service industries alike.
For any business seeking to operate with increased leanness, flexibility and bottom-line impact, demand-driven methodologies deserve strong consideration. With persistence, these methodologies have the power to transform even the most complex of global supply chains.
