Demand chain planning operations within capacity constraints : Nestlé ZAR.

Abstract

Organisations are currently faced with difficulties in effectively aligning demand plans to the volatile environments in which they operate. While operating environments and consumer needs change, capacity capabilities often do not reflect the demand plans. The absence of alignment results in inaccurate forecasts, thus putting the long-term sustainability of a business at risk. The focus and aim of the study is to understand how demand planning operations are aligned with capacity constraints at Nestlé ZAR. A quantitative explorative case study research design is being used and data was collected through a structured self-administered questionnaire in this study. The final sample size is 86, which comprised of employees from Demand and Supply Planning, Finance and Control, Sales and Marketing divisions. The sample includes top management, middle management, first level management and non-management. Data analysis uses descriptive and multivariate statistics. Ethical clearance was obtained from the University Ethics Committee and ethical principles were observed throughout the study. The study findings show that the organisation of interest in this study was perceived as adhering to capacity planning principles. The majority of the respondents perceived positively the capacity demand planning process. An average of 50% scored 22, which indicated a relatively high positive perception with regards to demand chain principles. The majority of the participants responded positively to the statements that information sharing achieves demand chain coordination and improves collaborative demand planning. An average of 50% scored 24, which indicated a relatively high positive perception with regards to information sharing. The results showed few capacity constraints that were perceived or experienced in this organisation. An average of 50% scored 17 which indicated that a moderate number of participants experience capacity constraints. Although the Spearman correlation did not sure any significant relationship between variables of interest in this study, the findings showed a wide range in the distribution of the responses of the participants in some items. This study highlighted that there is no one single approach to improving demand chain performance, but it was evident that allowing collaborative demand plans by using quality information shared can reduce impact of capacity constraints and improve planning performance. This study recommended that top management should provide full support to information sharing initiatives to facilitate the demand planning process. A national study to be conducted as this was conducted in one province, with a limited sample size. Keywords: Demand chain, information sharing, capacity.