What is Demand Flow Technology?

Many have asked over the years; What is Demand Flow Technology (DFT)? Well, originally developed in the mid-80’s, Demand Flow Technology (also referred to as Demand Driven Flow Technology – DDFT) is a scalable and comprehensive, mathematically-based Demand Driven improvement strategy designed to drive high levels of response capability, compress lead times, improve productivity and reduce costs enabling manufacturers to become more effective in meeting the needs of their customers on a daily basis. Demand Driven manufacturing with world-class customer service is achieved through alignment of advanced planning strategies with the response capability of the factory matched to actual customer demand. This creates a fundamental shift in strategy that forms the foundation for a responsive Demand Driven manufacturing organization.

So in short, Demand Flow Technology enables companies to maximize flexibility, agility & adaptability, responding faster & more efficiently to the needs of their customers.

Becoming Demand Driven in a VUCA World

As we all know, customer demand is extremely variable, and at times often volatile, requiring traditional manufacturing operations to maintain customer service levels by employing inventory in Finished Goods as well as throughout production and huge levels of raw materials. The nature of volatile sales demand is one element of a VUCA (Volatile, Uncertain, Complex and Ambiguous) world. This VUCA world is challenging the operating models of organizations all over the world. Challenges of longer and fragmented supply chains and customer tolerance times that are becoming even shorter are driving traditional supply chain and manufacturing operating models to hold even higher levels of inventories. The nature of a VUCA world is also driving higher levels of material shortages further hitting customer service levels.

Companies must adapt or die. Operating models and systems require wholescale change. Key for sustainable business performance with bottom-line growth are high levels of adaptability, agility, flexibility and responsiveness to align with the business to the needs and changes in the market. Through the design of a Demand Flow Technology environment, a company will gain in capability, agility and flexibility, to produce to actual demand requirements improving customer service levels, through improved manufacturing response in the factory thereby eliminating excess production inventories. Furthermore, the previously high levels of raw material inventories are no longer needed to support a manufacturing environment with Demand Driven capabilities.

Responsive Demand Driven Operating Systems

The goal for any company operating DFT is to have an agile production facility that is adaptive to customer demand requirements and is aligned with the entire Supply Chain. The business needs to become Demand Driven to survive and transition itself away from business processes that have traditionally permitted production environments to add significant costs to the business through long lead times and excessive over-production. Demand Flow Technology excels in providing the math and science to perfectly synchronize, balance and align the entire manufacturing environment accommodating changes in customer demand with minimal supporting inventory requirements.

Mixed-model flow is established through the optimization of manufacturing resources (labor and machine) supported by dynamic material replenishment strategies to achieve a faster and repeatable response. The proven framework and Demand Flow Technology toolset ensures production processes are synchronized, balanced and reorganized in a flow to enable substantial improvements in product velocity through production, with material replenishment systems designed to improve material availability, provide flexibility, reduce overhead and provide early visibility of shortages.

Companies around the world have achieved significant business improvements through the utilization of Demand Flow Technology that enables significant and in many cases the dramatic reduction of lead time. Not only is this response capability improved and aligned to the needs of the market, but improved consistency and repeatability of reduced lead times also drive higher levels of customer service levels and the further growth of the business.

The success of Demand Flow Technology in Industry

Global organizations are being transformed, regaining control of previously unbalanced production environments along with the high levels of inventory and ever-increasing operational costs that are associated with traditional operations. Equally successful in all industries, DFT is the science behind flow manufacturing techniques utilized by leading companies such as Advanced Energy Industries, Boeing, Garmin, Hyster-Yale, Industrial Scientific Corporation, John Deere, and Nortek. The importance of Demand Flow Technology to manufacturers was stressed by the former Chairman and CEO of GE, Jack Welch when he stated “DFT is an absolute business discipline…it’s another way to simplify the business.”

Benefits & Conclusion

Demand Flow Technology enhances profitability by leveraging increased speed and response through manufacture. Companies around the world have utilized Demand Flow Technology to deliver rapid and sustainable bottom-line benefits. Working capital reductions of 41% on average and an average lead time reduction of 49% are achieved through the capability of DFT manufacturing environments and the creation of balance and flow resulting in an average space reduction of 15%. Average improvements of 8% of Cost of Goods (COGS) are attained as a result of significant productivity gains and a focus on flexible employees.

Customer satisfaction improves on average by 9% through improved on-time deliveries and a consistent, predictable, repeatable response. Furthermore, a DFT organization can achieve greater competitive advantage and increased market share realized through the capability to manufacture any product based on actual customer demand rather than a forecast. Competing organizations have few options available to them; they can tie up more working capital with additional inventory, increase levels of overtime, or increase resources.

Demand Flow Technology will impact your business with improved customer satisfaction, compressed lead times, reduction in working capital and reduced Cost of Goods Sold, elevating the business to become a market leader. Demand Driven companies never stand still, continuous improvement and redesign of the Demand Driven environment are key to on-going success. Failure to adapt as the business landscape changes will result in a flow line that is incapable of meeting the needs of the market.