The most common question I am asked when meeting a client is this: “What impact will Demand Driven Flow Technology have on my business?” My response is that, on average, businesses will see improvements of 49% in lead time achievement, 41% in working capital, 20% in productivity, 9% in customer service levels and 8% in the cost of goods sold (COGS). Before we start talking about what impact Demand Driven Flow Technology has on a business, we must first understand what it is. How is Demand Driven Flow Technology defined and how is it used to impact the health of your business?
What is Demand Driven Flow Technology?
Demand Driven Flow Technology (DDFT) (previously known as Demand Flow Technology – DFT) is a scalable and comprehensive, mathematically-based business improvement strategy that drives high levels of response capability, lead time compression and enables manufacturers to more effectively meet the needs of their customers on a daily basis. It balances customer demand with advanced planning strategies and response capabilities of factories and supply chains to deliver speed and response to the customer.
DDFT drives substantial cost and productivity improvements through the use of a structured, mathematically-based toolset to simulate and design mixed-model production flow lines. Furthermore, the tools define optimized inventory requirements at each node of the entire supply chain, enabling strategic inventory reduction to deliver world-class customer service in today’s New Normal. This creates a shift in the fundamental production strategy that forms the foundation for a responsive organization. Demand Driven Flow Technology is the science behind the flow and pull techniques utilized by today’s leading manufacturers. This was summed up a few years ago by the former Chairman and CEO of GE, Jack Welch, who stated that “DFT is an absolute business discipline…it’s another way to simplify the business.”
As we all know, customer demand is extremely variable, and at times it is often volatile, requiring business operations to maintain customer service levels through the deployment of inventory buffers throughout production and in Finished Goods. Where Demand Driven Flow Technology excels is by providing the math and science to synchronize and balance every manufacturing process to ensure that the entire facility has the capability and flexibility to manage changing customer demand requirements. It utilizes a mixed-model flow with optimized resources supported by dynamic material replenishment strategies to achieve a faster and repeatable response to daily demand. With a more repeatable response cycle that is synchronized to daily demand requirements, global organizations are transformed, gaining control of unbalanced production environments with high levels of inventory and ever-increasing operational costs.
Demand Driven Flow Technology enables companies to compress lead times by as much as 98%, improve productivity by as much as 69%, and reduce WIP by as much as 60% while increasing levels of output and manufacturing in less space. Our Demand Driven transformational manufacturing solutions are focused on creating synchronized and balanced flow through factories around the world, generating sustainable bottom-line benefits. Leveraging these benefits helps our customers to create a competitive advantage in their marketplace.
Implementation of Demand Driven Flow Technology
Implementation begins in the factory to eliminate it as a variable causing poor customer response. In fact, within the factory, DDFT is first implemented at the point closest to the customer within assembly lines, paint, test and pack before moving upstream to feeder environments such as machine shops, fabrication areas and SMT lines. We start with the production processes closest to the customer as the benefits of speed and response gained here from significant lead time compression will almost immediately be seen by the customer. If we were to start in the upstream feeder areas such as the machine shop, the majority of benefits gained would be lost through subsequent rescheduling and queuing within the downstream production areas before the final product can be dispatched to the customer.
Through the elimination of continual queuing and rescheduling along traditional production paths, we are able to significantly reduce the lead time to the actual touch time in which the product is built. When manufacturing environments are in a balanced flow, it will now be agile and adaptive to changes in mix and volume on a daily basis with the facility now able to be driven to actual customer demand.
Implementation of Demand Driven Flow Technology doesn’t end here, it is a business strategy, not just a manufacturing methodology. The same toolset utilized in the factory to compress production lead times can be applied to other business processes. Order entry and configuration, credit card processing, and document control are all examples within administrative business processes where DDFT has supported further benefits in responding to the customer with greater speed and response.
In Part 2 of this series, we will look at how we need to change the way we manage a business post-implementation.
Further Information
Previous High Impact Insights:
- What is Demand Driven Flow Technology
- What is The Difference Between Lean and Demand Driven Flow Technology?
- Benefits Achieved by Our Clients
- What is DDMRP?
- MRP – Solution or Problem
- Adapt or Die – Become Demand Driven
- Supply Chain Brain: DDMRP as an Emerging Disruptive Supply Chain Capability
- What Does VUCA Mean?
Overview of High Impacts’ Demand Driven strategies that will transform your factories and supply chain network:
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Talk to us today to learn more about how we can help your organization become Demand Driven through adoption of our Demand Driven methodologies, DDMRP and Demand Driven Flow Technology.
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