{"id":713,"date":"2018-09-14T13:46:03","date_gmt":"2018-09-14T13:46:03","guid":{"rendered":"https:\/\/isimplan.com\/web\/?p=713"},"modified":"2018-09-17T13:31:32","modified_gmt":"2018-09-17T11:31:32","slug":"supply-chain-in-emerging-markets-how-isimplan-and-ddrmp-can-be-used-to-mitigate-supply-chain-volatility","status":"publish","type":"post","link":"https:\/\/isimplan.com\/web\/2018\/09\/14\/supply-chain-in-emerging-markets-how-isimplan-and-ddrmp-can-be-used-to-mitigate-supply-chain-volatility\/","title":{"rendered":"Supply Chain in Emerging Markets: How iSimPlan and DDRMP can be used to Mitigate Supply Chain Volatility"},"content":{"rendered":"Supply chain volatility is a term that is often used interchangeably with supply chain variability [1]. It\u2019s also a term that is being used more frequently as supply chains grow in size and complexity. But what exactly is \u2018supply chain volatility\u2019? This is a question that has been asked repeatedly by supply\u00a0chain professionals and academics, to the point where a conceptual framework has been developed to attempt to align all the different definitions out there [2].\r\n\r\nRegardless of the definition used, the result of supply chain volatility is that organisations fail to get the right product, to the right place, at the right time, and for the right price. In the African Market sources of variability are extremely varied and can come from within an organisation and from external sources as listed below.\u00a0With so many sources of variability in an emerging markets it\u2019s no wonder that growing an organisations\u2019 presence in that market is challenging [3], [4].\r\n\r\nSupply Chain Barriers in African Emerging Markets (Adapted from[5])<\/strong>\r\n
    \r\n \t
  1. Geographic constraints in the form of access to multiple transportation modes (sea, inland waterway, rod and rail) and the physical location of the market base, including distances between these and established transportation routes.<\/li>\r\n \t
  2. Instability (economic, political, social, etc.) leading to high variability. This is often linked with high risks and a lack of security.<\/li>\r\n \t
  3. Political and regulatory barriers can come in many forms, including corruption, lack of legislation and\/or transparency and sudden policy changes.<\/li>\r\n \t
  4. Limited transport and logistics infrastructure which can be of poor quality where extant.<\/li>\r\n \t
  5. Lack of supply chain structure resulting from a fragmented supply chain and narrow supply base.<\/li>\r\n \t
  6. Market structure variability including customer disposable income and local competitors.<\/li>\r\n \t
  7. Poor strategic supply chain planning.<\/li>\r\n<\/ol>\r\nThe best way for organisations to combat volatility, regardless of the source, is to start taking a proactive, rather than reactive, approach to supply chain planning. While it is impossible to plan for and guard against every perceivable source of volatility, there are methods which can be employed that can lessen the effect of variability on supply chain performance. One of the more common methodologies for reducing the impact of supply chain volatility is to shift from push driven supply chain planning to pull driven supply chain planning [1], [6], [7].\r\n\r\nIn the African market the need to adopt a more demand (pull) driven planning approach is evident as more organisations shift to a customer-centric operational model (Barloworld Logistics, 2015). This is seen in the pharmaceutical industry, where ensuring that the supply chain moves efficiently and can be a matter of life and death [11], [12]. Forecasting has long been used as a technique to anticipate customer demand and plan accordingly. This method has been shown to be inaccurate at best, and more often than not has a negative effect on inventory, as well as on customer service levels [13], [14].\r\n\r\nThe inherent inability of forecasting to predict demand has left the door open for the development of demand driven strategies which allow organisations to respond to actual demand fluctuations in real time [13], [15], [16]. A methodology which has garnered a significant amount of attention recently is that of Demand Driven Materials Requirements Planning, developed by Carol Ptak and Chad Smith [17], [18].\r\n\r\nDemand Driven Materials Requirements Planning (DDMRP) uses the placement of strategic, dynamic inventory buffers to mitigate the negative effects of demand volatility. These buffers are NOT safety stock, rather they are defined by the average daily usage of an item, it\u2019s lead time, variability in its\u2019 supply and variability in its\u2019 demand [18]. By capturing all the volatility data intrinsic in these parameters, strategic buffers are able to negate common effects of demand volatility, such as stock outs and conversely over-stock, which can be detrimental to customer service, profitability and the customer centric shift described above [11].\r\n\r\nIn emerging markets such as Africa, where supply chain volatility is far more prevalent than in established markets [4], organisations must take advantage of all methods of mitigating this volatility to successfully grow within the market. DDMRP offers an effective means of managing supply chain volatility in emerging markets, as can be seen in the success reported by ABE Construction Chemicals in South Africa. After implementation of DDMRP they have seen a significant reduction in stock outs and overstock situations and a corresponding increase in customer satisfaction [19].\r\n\r\nSuccess stories for DDMRP implementations are increasing as this methodology grows in popularity [20]. These success stories highlight the benefits of improved flexibility and responsiveness to supply chain volatility offered by the DDMRP methodologies. In emerging markets, a barrier to the adoption of these methodologies is the affordability of software, the cost of training and the need for on hand support for addressing the unique challenges that face these markets.\u00a0iSimPlan\u00a0is the first Demand Driven Institute Compliant DDMRP software developed in Africa, with a specific focus on assisting organisations in emerging markets to overcome these barriers while delivering a world class product.\r\n\r\nBased in South Africa,\u00a0iSimPlan\u00a0developers and consultants have the distinct advantage of daily exposure to supply chain management in an emerging market, allowing them to provide services tailored to this market.\u00a0iSimPlans\u2019 customisable dashboards allow organisations to have an overview of the health of their strategic buffers, and so the organisations\u2019 ability to respond to supply chain volatility.\r\n\r\nAn added benefit to organisations based in Africa is that\u00a0iSimPlan\u00a0support and training staff are close at hand when needed. This is enhanced by the coaching and change management training that come as a prerequisite to any implementation. These features provide organisations with a competitive advantage that will allow them not only to grow, but to thrive in any market.\r\n

    Is your organisation experiencing the negative effects of supply chain volatility?<\/em><\/h2>\r\nContact us to find out more about an iSimPlan Proof of Concept trial for your organisation.<\/em><\/a>\r\n\r\nReferences<\/strong>\r\n
    [1]\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0B. Render, \u2018Managing Demand Variability and Volatility \u2013 Supply Chain Nation Blog\u2019, 2012. [Online]. Available: https:\/\/blog.jda.com\/managing-demand-variability-jda-software-supply-chain\/. [Accessed: 04-Sep-2018].<\/h6>\r\n
    [2]\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0B. Nitsche and C. F. Durach, \u2018Much discussed, little conceptualized: supply chain volatility\u2019,\u00a0Int. J. Phys. Distrib. Logist. Manag.<\/em>, 2018.<\/h6>\r\n
    [3]\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0M. Christopher and M. Holweg, \u2018\u201cSupply Chain 2.0\u201d: Managing supply chains in the era of turbulence\u2019,\u00a0Int. J. Phys. Distrib. Logist. Manag.<\/em>, vol. 41, no. 1, pp. 63\u201382, Feb. 2011.<\/h6>\r\n
    [4]\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0T. Nieuwoudt, \u2018Supply Chain Challenges in Emerging Markets : Key Issues in Logistics & Supply Chain\u2019,\u00a0Strategic Marketing Africa<\/em>, pp. 32\u201336, 2015.<\/h6>\r\n
    [5]\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0W. Piotrowicz and R. Cuthbertson,\u00a0Supply Chain Design and Management for Emerging Markets<\/em>. 2015.<\/h6>\r\n
    [6]\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0R. Miclo, F. Fontanili, M. Lauras, J. Lamothe, and B. Milian, \u2018An empirical comparison of MRPII and Demand-Driven MRP\u2019,\u00a0IFAC-PapersOnLine<\/em>, vol. 49, no. 12, pp. 1725\u20131730, 2016.<\/h6>\r\n
    [7]\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0R. Gangadharan, \u2018Supply Chain Strategies to Manage Volatile Demand\u2019,\u00a0Supply and Demand Chain<\/em>, 2007.<\/h6>\r\n
    [8]\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0J. Tompkins, \u2018Why you need to switch to a customer centric supply chain to stay competitive – Trade Ready\u2019,\u00a0Trade Ready<\/em>, 2015. [Online]. Available: http:\/\/www.tradeready.ca\/2015\/trade-takeaways\/need-switch-customer-centric-supply-chain-stay-competitive\/. [Accessed: 09-Sep-2018].<\/h6>\r\n
    [9]\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0R. Howells, \u2018Creating A Customer-Centric Supply Chain\u2019,\u00a0Digitalist Magazine<\/em>, 2016.<\/h6>\r\n
    [10]\u00a0\u00a0\u00a0\u00a0\u00a0Barloworld Logistics, \u2018Embracing change for a sustainable future\u2019, pp. 1\u201388, 2015.<\/h6>\r\n
    [11]\u00a0\u00a0\u00a0\u00a0\u00a0L. Bam, Z. M. McLaren, E. Coetzee, and K. H. Von Leipzig, \u2018Reducing stock-outs of essential tuberculosis medicines: A system dynamics modelling approach to supply chain management\u2019,\u00a0Health Policy Plan.<\/em>, vol. 32, no. 8, pp. 1127\u20131134, 2017.<\/h6>\r\n
    [12]\u00a0\u00a0\u00a0\u00a0\u00a0B. Goshorn and C. Usswald, \u2018Pharmaceutical supply chains in Africa \u2013 overcoming unique transport security challenges\u2019,\u00a0J. Transp. Secur.<\/em>, vol. 7, no. 4, pp. 333\u2013337, 2014.<\/h6>\r\n
    [13]\u00a0\u00a0\u00a0\u00a0\u00a0M. Christopher,\u00a0Logistics and supply chain management<\/em>, 4th ed. Pearson Education Limited, 2012.<\/h6>\r\n
    [14]\u00a0\u00a0\u00a0\u00a0\u00a0S. Cannella, J. Ashayeri, P. A. Miranda, and M. Bruccoleri, \u2018Current economic downturn and supply chain: The significance of demand and inventory smoothing\u2019,\u00a0Int. J. Comput. Integr. Manuf.<\/em>, vol. 27, no. 3, pp. 201\u2013212, 2014.<\/h6>\r\n
    [15]\u00a0\u00a0\u00a0\u00a0\u00a0M. Mitchell, M. Bourde\u0301, K. Butner, and C. Hawker, \u2018Transforming your supply chain to on demand: Competitive advantage or competitive necessity?\u2019, p. 51, 2003.<\/h6>\r\n
    [16]\u00a0\u00a0\u00a0\u00a0\u00a0J. Budd, C. Knizek, and B. Tevelson, \u2018The Demand-Driven Supply Chain; Making It Work and Delivering Results\u2019, 2012.<\/h6>\r\n
    [17]\u00a0\u00a0\u00a0\u00a0\u00a0R. Miclo, M. Lauras, F. Fontanili, J. Lamothe, and S. A. Melnyk, \u2018Demand Driven MRP: assessment of a new approach to materials management\u2019,<\/h6>\r\n
    Int. J. Prod. Res.<\/em>, vol. 7543, pp. 1\u201316, 2018.<\/h6>\r\n
    [18]\u00a0\u00a0\u00a0\u00a0\u00a0C. Ptak and C. Smith,\u00a0Demand Driven Materials Requirements Planning (DDMRP)<\/em>. Industrial Press, Inc., 2016.<\/h6>\r\n
    [19]\u00a0\u00a0\u00a0\u00a0\u00a0Demand Driven Institute, \u2018ABE Construction Chemicals\u2019,\u00a0Demand Driven Institute Case Studies<\/em>, 2016. [Online]. Available: https:\/\/www.demanddriveninstitute.com\/case-studies. [Accessed: 07-Sep-2018].<\/h6>\r\n
    [20]\u00a0\u00a0\u00a0\u00a0\u00a0Demand Driven Institute, \u2018Case Studies\u2019.<\/h6>","protected":false},"excerpt":{"rendered":"

    Supply chain volatility is a term that is often used interchangeably with supply chain variability [1]. It\u2019s also a term that is being used more frequently as supply chains grow in size and complexity. But what exactly is \u2018supply chain volatility\u2019? This is a question that has been asked repeatedly by supply\u00a0chain professionals and academics,<\/p>\n","protected":false},"author":4,"featured_media":715,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_EventAllDay":false,"_EventTimezone":"","_EventStartDate":"","_EventEndDate":"","_EventStartDateUTC":"","_EventEndDateUTC":"","_EventShowMap":false,"_EventShowMapLink":false,"_EventURL":"","_EventCost":"","_EventCostDescription":"","_EventCurrencySymbol":"","_EventCurrencyPosition":"","_EventDateTimeSeparator":"","_EventTimeRangeSeparator":"","_EventOrganizerID":[],"_EventVenueID":0,"_OrganizerEmail":"","_OrganizerPhone":"","_OrganizerWebsite":"","_VenueAddress":"","_VenueCity":"","_VenueCountry":"","_VenueProvince":"","_VenueZip":"","_VenuePhone":"","_VenueURL":"","_VenueStateProvince":"","_VenueLat":"","_VenueLng":""},"categories":[23,2],"tags":[],"_links":{"self":[{"href":"https:\/\/isimplan.com\/web\/wp-json\/wp\/v2\/posts\/713"}],"collection":[{"href":"https:\/\/isimplan.com\/web\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/isimplan.com\/web\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/isimplan.com\/web\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/isimplan.com\/web\/wp-json\/wp\/v2\/comments?post=713"}],"version-history":[{"count":2,"href":"https:\/\/isimplan.com\/web\/wp-json\/wp\/v2\/posts\/713\/revisions"}],"predecessor-version":[{"id":763,"href":"https:\/\/isimplan.com\/web\/wp-json\/wp\/v2\/posts\/713\/revisions\/763"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/isimplan.com\/web\/wp-json\/wp\/v2\/media\/715"}],"wp:attachment":[{"href":"https:\/\/isimplan.com\/web\/wp-json\/wp\/v2\/media?parent=713"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/isimplan.com\/web\/wp-json\/wp\/v2\/categories?post=713"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/isimplan.com\/web\/wp-json\/wp\/v2\/tags?post=713"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}