There is no doubt that the present and future of distribution is on demand. Customers in general are a demanding lot. Never before have customers been so wealthy, so well informed, and so critical. That means that the old theories about supply chain operations just went out the window. Adaptation equates with survival, and smart distributors are learning to adapt.
The working definition of distribution on demand (DOD) is the order fulfillment state an organization achieves when it can respond, in close to real time, to changes in demand while shipping 100% customer compliant orders at the least cost. And, thats a hard state to achieve when customers expectations are at an all time high. Distribution on demandequires the highest levels of synchronization and organization possible.
What happens in the supply chain with distribution on demand? Processes have to be end-to-end integrated so that every action creates a chain reaction. For example, when a customer orders a product, all of the distribution functions are triggered effectively to handle the impact of that order.
Critical issues come into play in a distribution on demand system. Some of the problems associated with distribution on demand are SKU proliferation, cyclical labor, coordinating multiple vendors, and so on. At the same time, there are opportunities for continuous improvement and performance management, resulting in improved market share.
There are three key processes that can help a business identify where it stands with regard to distribution on demand. The first is delivery performance, which is a measure of the percentage of customer orders delivered on time and in compliance. The second is order fulfillment lead time, or the amount of time from customer order to the customer receipt of the product. And, the third is distribution response time, which is the amount of time a distribution operation takes to respond to changes in demand at the least cost without penalties.
Seamless, synchronized processes are what distribution on demand is all about. Those processes must be integrated end-to-end and demand the right mix of technology, infrastructure and labor to make them work. Thats where Distribution Intelligence Software (DIS) comes into play. Existing assets like WMS, MHE and labor are all synchronized by DIS. Events are tracked by the software and data is turned into continuous feedback enabling performance evaluation and process synchronization.
The distribution world is a complicated place in this economy, and it is not likely to become any less complex in coming years. Businesses are forced to implement distribution on demand technology in order to be competitive and meet the needs of their customers before someone else does.