“Demand-Driven manufacturing is a manufacturing requires a fundamental shift form the centrality of inventory to the centrality of demand. To be successful, company must be able to sense and adapt to market changes.” – This is from the Orlicky’s Material Requirements Planning 3/E.written by my recent podcast guest Carol Ptak and Chad Smith of the Demand Driven Institute.
Why is sales and marketing the last to adapt to this thinking? Sure, they understand that push marketing does not work and have stopped sending out promotional mailings, feature driven ads and of course they never encourage cold-calling! Or have they? Most ideas for good marketing are investing more money to get someone into their funnel, not to make that time in the funnel a memorable experience.
After reviewing the new book, I saw striking similarities in DDMRP that can directly apply to the sales and marketing process. They are substantially solving the same problem that exist in sales and marketing. It is no longer a market that has excess demand. Our product/service cannot be at the centrality of our sales and marketing process. With lessons learned from D-Logic (The Service-Dominant Logic of Marketing by Stephen Vargo and Robert Lusch) concepts the centrality of our sales and marketing must be the value that is created in the use of our product or service.
Demand Drive MRP is focused around critical parts called strategically replenished parts. It has five integral components that are:
- Strategic Inventory Positioning
- Buffer Profiles and Level Determination
- Dynamic Buffers
- Demand-Drive Planning
- Highly Visible and Collaborative Execution
I intend to break each of these components down in future blog posts to demonstrate the viability of this thinking. It is not meant to replace an existing sales and marketing structure. It had not been used and is pure conjecture on my part. However, it offers some interesting parallels that are worth considering. I encourage listening to the podcast with Carol and Chad, Is Orlicky’s MRP relevant today? Think DDMRP and even their earlier ones listed on the podcast page as they set the stage for this discussion.
This blog series will show how a DDMRP process can reduce dramatically the uncertainty in response levels required and sort the important responses needed. If this can be done we may be on a path that efficiencies and increased effectiveness is possible in sales and marketing. It’s interesting to note that DDMRP does not replace but leverages technologies like Theory of Constraints and Lean.
Many times in my discussions of mirroring the customer buying process and building the appropriate value stream and response, we have a tendency to consider a one to one marketing approach. Looking at the value stream through the glass of DDMRP it answers the question of a more complex and larger environment.
How outdated is your sales channel structures? Are you segmenting by products or geographically? Or Direct Sales and Distribution? Or even Online and Offline? Once someone is in the sales funnel are they classified be level of interest such as A,B,C? Or level of opportunity? Maybe you consider past, present or new? Or in new marketing circles we are discussing early adaptors, earl majority, etc.? Or the buzz words like Influencers and Enablers? How do you decide? Or for that matter, do any of them work?
The three will-known rules of forecasting have always limited the sales and marketing world:
- Forecasts are always in error.
- The more detailed a forecast, the more error will be realized.
- The further into the future the forecast goes, the more error will be realized.
Most experienced sales and marketing are aware of these shortcomings and the wide array of sales and marketing processes. Most believe that it still comes down to beating the pavement. Can that be changed?
First, you must answer: How do you manage variability and volatility in today’s market? The book starts out by saying, “Experts in variability and volatility tend to be less enterprise focused and more specific event focus. Variability must be considered in relation to its impact across a holistic system. All variation does not have the same impact. Reducing variability does not necessarily improve the overall process. There are places where it must be protected against in order to keep the system stable and effective.”
Can we protect key portions of our sales channels? Can we reduce variability and volatility in sales and marketing? Seems like a tall order. However, if it is being done in the supply chain based on a forecast that sales and marketing is forecasting, why can’t we improve our forecasting by considering the same five steps with a slightly different view:
- Strategic Inventory Positioning: Position our organization to learn from our customers.
- Buffer Profiles and Level Determination: Profile the customer and our knowledge gaps
- Dynamic Buffers: Flexibility within teams to self-organize autonomously
- Demand-Drive Planning: Use of a system that promotes better and quicker transfer of knowledge at the execution level.
- Highly Visible and Collaborative Execution – Why change this?l
Our exploration has started.
The Perfect Storm has come together of Excess Capacity and Product Variety
Will Product Managers embrace Open Innovation?
Implementing the TOC Supply Chain Solution
Transforming your Supply Chain to a Lean Fulfillment Stream eBook