DEMAND DRIVEN SUPPLY CHAIN IN THE GLOBAL ECONOMY - TRENDS AND INSIGHTS

Demand-Driven Supply Chain is defined as ¿a system of coordinated technologies and processes that senses and reacts to real-time demand signals across a network of customers, suppliers and employees¿ (Boston Consulting Group, 2012). This is the commonly and widely accepted definition of DDSC, which is nowadays becoming increasingly important in the Supply Chain Management (SCM) field. In order to implement the DDSC system, all the actors across the supply chain must be coordinated and aligned. It is a system which is similar to vertical integration, but no investments in acquiring external companies are needed: at the same time, many advantages, like those of vertical integration, are achievable; it is a virtual integration, since the players remain independent but collaborate and are aligned only for what concerns the supply chain. Companies, then, are able to react quickly, efficiently and effectively to possible unexpected variations, while offering high-quality services, increasing sales and decreasing costs overall. This avoids the risk of the so-called Bullwhip effect, which is a distribution channel phenomenon in which a small fluctuation at the lowest level of the Supply Chain gets bigger and bigger throughout the other levels. It is possible to identify four key pillars, on which DDSC is based: ¿ Visibility: transparent levels of demand and inventory across the supply chain; ¿ Infrastructure: robust infrastructure which allows supply chain actors to adapt quickly to short-term variations in demand and supply; ¿ Coordination: strong coordination among all the actors in the supply chain in order to act flawlessly and cost-effectively; ¿ Optimization: optimize overall supply chain performances (not just reducing costs), providing the best customer service while reaping major financial benefits