Demand management synchronization

Demand Management, which encompasses aU aspects related to reading, sensing, shaping and synchronizing customer demand. 

Based on Croxton et al. (2002), the demand management process is concerned with balancing the customers requirements with the supply chain capabilities. This includes forecasting demand and synchronizing it with production, procurement, and distribution capabilities. A good demand management process can enable a company to be more proactive to anticipated demand. 

For Croxton et al. (2002), demand management is about forecasting and synchronizing, and has both strategic and operational sub-processes, as shown in Fig. 4.2. 

The framework is mainly based on the supply chain management framework of Rohde et al. (2000). Rohde s work is gradually enhanced to address the aspects of synchronized decision making within the value chain and the integration of supply, demand and value management concepts as shown in fig. 17. The framework is structured into the areas value chain, processes and methods. 

Marketing requirements and production plans should be coordinated on an enterprise-wide basis. Thus, multiple sourcing and routing options are considered at the time of order receipt, which allows market requirements and production plans to be coordinated on an organization-wide basis. In very advanced SCM systems, customer demand and production rates are synchronized to manage inventories globally. 

If the temporal demand levels can be forecast, then a dynamic adjustment of capacity to synchronize with demands may enable performance improvement without a significant increase in capacity levels. As an illustration, allocating employees to temporally sta ered shifts can be a mechanism to manage the impact of demand variation. 

This model is based on the concepts of constraints management and synchronous flow, which are rooted in the fundamental laws of physics. (See Chapter 7 for a further description of Constraints Management.) Focusing on a single control point and subordinating all other resources and processes to that point can synchronize any system. The obvious point to use as the control of a supply chain is the market that it serves. It makes no sense to produce or process any more than the market demands and it is fully intuitive that the entire system should be focused on producing just what the market wants. While this seems like a statement of the obvious, there is ample evidence that the business world does behave in this manner. To quote Mark Twain Common sense is not very common. ... 

The synchronized supply chain has been tested repeatedly and it does address the more common problems of the traditional approach. The key is communication from the market. Material and information is released into the system based on the consumption at the primary control point. Every supplier of raw material as well as every producer along the supply chain is linked to that actual demand. Strategically sized and located buffers of inventory are designed to absorb the unpredictable variability, and sufficient protective capacity is planned to maximize the velocity of the product flow. As a result, the waves of demand are avoided and the productivity of the entire system is made much more predictable. As well, the properly synchronized system is more stable and easier to manage. 

Manage demand to improve synchronization in a supply chain in the face of predictable variability. 

---