2020

How to save ROI in the VUCA world with Demand Driven MRP

VUCA is an acronym for 4 terms (Variability, Uncertainty, Complexity, Ambiguity) which concisely defines today' s global competitive context. VUCA is the result of phenomena such as globalisation, the internet, progressive digitalisation, the tumultuous growth of a huge middle class outside Europe and free trade treaties (from the legendary WTO to the most recent TTIP etc.)

It is the context in which, despite themselves, all manufacturing companies - and in the next 5 years also many service companies - find themselves. The VUCA world is now the new normal. The companies that manage to ride it out will progress, the rest will suffer a bad end.

The phenomena "VUCA World"

If we look at manufacturing, we can list the symptoms of the VUCA world - of this new normal - such as:

- Increasingly inaccurate forecast.

- Product variety growing exponentially. Companies have increasingly expanded the range of products to increase AUDI announced a few days ago a decisive reduction in the range, due to a too-high complexity.

- Lengthening supply lead Globalisation has geographically extended supply chains and has made it common practice to take on large batches and with long lead times; as a further side effect there is a progressive loss of visibility in the supply chain. Any variation compared to the planned conditions only increases the so-called "whiplash effect"

- Reduced product lifecycles. The continuous growth of the competition requires a continuous introduction of new products

- The market in general requires ever shorter delivery lead Amazon led the way with Amazon Prime.

- Products that are intrinsically more and more complex, electronics and IT are essential components of the products. Product complexity that becomes complexity in the supply chain, different suppliers, different sectors, different

- Pressure to reduce a growing Inventory, the availability of money is increasingly the critical success factor for Companies are constantly engaged in net working capital reduction programs.

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Claudio Vettor

Teacher and DDMRP consultant at Advance School