Managing Demand

Aggregate planning manages supply (capacity and inventory) to handle demand variability. Hence it is a reactive process given a demand forecast. Typically, manufacturing departments are responsible for aggregate planning. 

Another approach to manage demand variability is to influence it through pricing and promotions, which are typically controlled by marketing and sales. The impact of promotions on demand is threefold  

Market growth Overall demand increases from existing as well as new customers. 

Stealing market share Competitor s customers may switch and become new customers. 

Forward buying Existing customers simply change the timing of the purchase to take advantage of the lower prices. 

we consider actions a supply chain can take to improve profitability by managing demand. 

Supply chains can influence demand by using pricing and other forms of promotion. For example, John Deere offers a discount to fanners who are willing to take ownership of a planter during the off-season. The further from the peak that a farmer places an order, the larger the discount offered by Deere. The goal here is to move demand from the peak period to the off-peak period, thus reducing predictable variability. It is thus important to understand how promotions influence demand. 

When a promotion is offered during a period, that period s demand tends to go up. This increase in demand results from a combination of the following three factors  

Market growth An increase in consumption of the product occurs fi om either new or existing customers. For example, when Toyota offers a price promotion on the Camry, it may attract buyers who were considering the purchase of a lower-end model. Thus, the promotion increases the size of the overall family sedan market as well as increasing Toyota s sales. 

Stealing share Customers substitute the firm s product for a competitor s product. When Toyota offers a Camry promotion, buyers who might have purchased a Honda Accord may now purchase a Camry. Thus, the promotion increases Toyota s sales while keeping the overall 

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Demand decisions estimation of demand and its characteristics and using price and capacity control to manage demand... 

Gupta A, Maranas CD (2003) Managing demand uncertainty in supply chain planning. Computers Chemical Engineering 27 (8-9) 1219-1227... 

Leverage product changes change. Standardize Find substitutes Change product specification Design to cost Manage demand... 

Successful management demands attention to the following points of principle ... 

Customer relationship management Customer service management Demand management Order fulfillment Manufacturing flow management Procurement... 

The demand management process must balance the customer s requirements with the firm s supply capabilities. Part of managing demand involves attempting to determine what and when customers will purchase. A good demand management system uses point-of-sale and key customer data to reduce uncertainty and provide efficient flows throughout the supply chain. 

It is most important for the producer of the used solvent, the firm(s) responsible for its transportation and the refiner to agree at a very early str e on nomenclature. Once the name has been chosen good management demands that it, and only it, should be used. 

The New World of Demand Management Demand Sensing, Shaping, and Translation... 

Market-Driven Signal Management Demand/Channel Sensing Demand Orchestration Demand Translation Supplier Sensing... 

Focus. In market-driven processes, the focus shifts from inside-out to outside-in. In traditional processes, the process focus is from inside the organization out, as opposed to from the outside (market-driven) in. To manage demand, focus is placed on revenue management as a horizontal process (this is covered in greater detail in Chapter 5). 

Manufacturing flow management Demand management and Product lifecycle management... 

Taylor (2000) developed an approach to eliminate demand amplification. The approach developed had the objective to be sufficiently straightforward to be easily applied by staff that has day-by-day responsibility for managing demand along a supply chain. There are seven steps to be followed ... 

There is a formal weekly Sales Operations Execution (S OE) meeting to review operational plans against actual performance, and manage demand and supply variability. 

Finally, we should point out that the matrix in Figure 3.1 presents what would appear to be reasonable approaches to managing demand in these four demand contexts, but not necessarily the only approaches. For example, non-stationary reorder point-order quantity systems are certainly possible, but probably not applied very often in practice due to the significant computational analysis that would be required. Indeed, the effort required to manage the system must clearly be considered in deciding which system to apply. While the "optimal" solution (at least from the standpoint of an objective that minimizes solely the costs that are directly impacted by inventory... 

Occupational Safety and Health Act (Finlex 2002) determines the duties and responsibilities in case of shared workplaces each for their part and together in adequate mutual cooperation and by information ensures that their activities do not endanger the employees safety and health. There is one company exercising the main authority (principal company), but health and safety management demands cooperation between each party. 

Supply management Demand management Product management Information management... 

Mitigation approach—supply management, demand management, product management or information management (Tang 2006). 

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