Market-driven supply chain demand management

Hornihrook, S. and A. Fearne, 2005. Demand driven supply chains Contractual relationships and the management of perceived risk. Paper presented at 2 European Forum on Market-Driven Supply Chains. Politecnico di Milano, April 5-6,2005. 

The global marketplace is volatile, fragmented, and dynamic. Supply processes are more mature than demand. There is a larger gap to fill in the redefinition of demand processes to be market driven than in any other area of supply chain management. 

In each stage of the market-driven capability model, the role of demand changes requiring a redefinition of forecasting processes. Additionally, at each stage of the demand process, a supply chain leader can chose to constrain the forecast (reducing volume requirements based on channel or supply-side constraints) to better manage the supply chain. 

The more steps back in the supply chain, the greater the demand latency and the larger the change management issues to overcome in becoming market driven. 

Logistics and supply chain management have conventionally been forecast-driven rather than demand-driven. In other words, the focus has been to look ahead over a planning horizon and to predict demand at a point in time and then to build inventory against that forecast. As markets become more volatile and turbulent... 

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