The Emergence of the Demand-Driven Service Chain

Whilst the service sector defines the Australian economy—employing four out five Australians and representing almost 70% of GDP—service chains have historically tended to lag supply chain maturity.

In Australia, the services sector is worth more than $1.66 trillion, employs around 78% of the workforce and represent 18% of Australia’s exports. The largest components of the sector are tourism, education, healthcare and financial services.

Service chains, in terms of maturity have historically tended to lag supply chain maturity. For example, the investment of forecasting and planning capability for supply chains was a game-changer and this capability is only now emerging in service chains. Such recognition by executives within services organisations is generating a new wave of investment in service chain capability.

Symptoms of a low maturity service chain include forecasting not done at required level of granularity, CVP/EVP not defined or communicated through organisation, typically higher employee turnover and customer churn rates, IT systems do not support optimisation requirements, no forward visibility of expected demand, unable to roster effectively, daily execution very reactive and lagging recruitment: for current needs, not future needs.

GRA views service chain management as an integrated system that must be considered holistically and be supported by a dedicated function within an organisation.

Our Service Chain Excellence framework enables service organisations to approach the service chain management task in an integrated manner. There are 3 key sections: Business Strategy, Target Operating Model and Service Chain Operations.

In a service chain with high maturity, an organisation will have pipeline visibility on service requests (demand) as well as recruitment (supply). This is what we call a Demand Driven Service Chain (DDSC).

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"GRA conducted a very thorough analysis and provided recommendations within an ambitious timeframe... GRA helped us improve morale and productivity almost immediately while giving us a roadmap for strategic planning as it relates to our warehouse operations."

– Larry Fells, Managing Director, Liberty Medical Pty Ltd

Typical results

  • 20-40% inventory investment reduction
  • increased service levels ranging up to 99.9%
  • 10%-15% reduction in supply chain operating costs
  • 5%-20% spend management savings
  • the ability to fund business initiatives from operating cash flow (OCF) improvements
  • improved return on capital employed (ROCE)
  • a minimum 3:1 ROI (10:1 to 30:1 typical)