Demand Management
By Simon Drews
What is Business Logistics all about? What should we definitely remember?
Correct! Business Logistics have to serve the CUSTOMER.
Why is that again?[1]
Let’s think back. We learned that Logistics are a very important part of the supply chain. It is “something” that makes sure that the right amount of our product or service is received by the customer at the right time. It provides “the bridge” needed between our production and the markets available. Those markets, where we want to sell our products and services to the customer. An individual that becomes increasingly hard to impress. He wants the best quality, for the lowest possible price and, please, personalized for his own specific needs. It is the customer who is “creating” the demand.
And what exactly is Demand Management?[2]
Well, we can’t foresee what the exact demand will be, can’t we? We don’t have the glass ball of a fortune teller and thus are not able to produce and offer just the right amount that easily. In short. Demand is variable! However, we must procure the right amount of raw materials and also need sufficient capacities to meet the demand. Furthermore, we want to be efficient and effective, which means we can’t just produce to the maximum of our capacity and flood our warehouses with finished goods. But how do we do this then? What is the optimal time to order new raw materials or start the production? You realize, if we don’t know the demand, we are kind of lost in this gigantic ocean that is called “variability”. In other words, good logistics require DEMAND FORECASTING.
“Demand management is the supply chain management process that balances the customers’ requirements with the capabilities of the supply chain. With the right process in place, management can match supply with demand proactively and execute the plan with minimal disruptions. The process is not limited to forecasting. It includes synchronizing supply and demand, increasing flexibility, and reducing variability.” [3]
OK! Wow. So, we are supposed to predict the future demand for our product [4] and do even more than that? Amazingly challenging! Think about it. Synchronizing implies that the demand effects many, if not all, departments along the supply chain. For example, the planning and scheduling of our production (Manufacturing and Sourcing). But also, the provisions for our finances and, last but certainly not least, it effects our Marketing Strategy (planning advertisement and implementing it) [5]. Please also check the following Figure!
[1] Résumé of our former lectures
[2] The Demand Management Process; Keely L.
Croxton et al. - The Ohio State University
[3] Definition of Demand Management from: The Demand Management Process - page 51 top
[4] Definition of Demand Forecasting: http://businessjargons.com/demand-forecasting.html
In conclusion. Forecasting is necessary, so that we are able to plan the procurement of raw materials, the production of goods, the storage and distribution of our products as well as our marketing and sales strategy, in the most efficient way possible, to meet the customer’s requirements.
Thank you so much for reading
Best regards
Simon Drews
Comentarios
Publicar un comentario