Supply chain management implies managing supply chain activities in order to increase the customer value and as well achieve the highest competitive advantage which is sustainable. Supply chains often cover all activities right from product formulation, the sourcing, production all production and also all information systems required in the coordination of all these activities. There are several processes involved in supply chain management, one of which is demand management which is discussed in this text (Arndt, 2004, 92). Demand management process is tasked with ensuring balance between the customer’s requirements with the supply chain capability. It therefore predicts demand and aligns it with production and distribution abilities.
With the emerging new technologies, organizations are in a state of competition in a bid to apply these technologies in order to increase the efficiency of the supply chains, improve on the satisfaction of the customers and as well increase the profitability of the organization. It is therefore necessary to have effective demand management process in place (Lummus and Vorkurka, 1999, 16). Demand management helps companies improve on their levels of inventory, improve on customer service as well as achieve enhancement in promotion and inventory planning. Three integrative themes in demand management have been proposed that is, process, configuration and social interaction as shown in the thematic table below.
|Social interaction||Sharing of information between firms, customers and suppliersValue creation|
|Configuration||Decisions regarding the number of customers that the firm is in a position to serveStep by step|
|Demand process||All processes involving the customerMeeting customer demands|
Demand process takes into account all processes that make customer considerations and the market with the intent of meeting the demands of the customer via value creation. To enhance customer satisfaction, demand process is often integrated with supply process (Shee and Abratt, 1989, 65). Supply process on the other hand involve the tasks that aim at fulfilling demand. A true picture on demand is not relevant if there is no well-established supply chain that is set to meet the demand. Appropriate demand management fosters the usage of business resources to improve on profitability. The success of the demand process is tied to accurate forecasting on the customer needs.
Organization ought to establish a proper demand and supply process alignment. When demand management is proficient enough, then the company achieves an effective supply chain management. This is because key elements result which include appropriate relationships when dealing with key suppliers, production of products at the right time and right quantities as well as building appropriate relationships with customers that provide mutual benefits. The demand process is therefore key in ensuring that demand matches supply chain in order to deliver against it in a manner that is cost-effective in nature.
Configuration is the other key theme in demand management. Configuration refers to the decisions regarding the number relating to customer segments which the company is able to serve with supply chains that are differentiated (Mentzer et al, 2001, 23). The implication is whether the supply chain is capable of satisfying all customer’s needs. In order to ensure the configuration of demand systems, some several tasks must be initiated. There is usually an ideation module where users can air their views and thereafter demand managers evaluate the ideas before promoting them into demands. The ideas once assessed can now be qualified into demands. The demand work bench offers comparison and assessment to demand before promoting these demands into projects or enhancements. In so doing, an organization is able to establish the customer demands which when integrated with the supply chain demand achieves improved profitability.
Social integration is the other key theme in demand management. It involves the sharing of information between marketers of a given product and the suppliers. Below is a graphic on how information and products flow within an organization
An illustration of how information flows within a supply chain management
This graphic representation shows how products and materials flow from the firm to the end user that is the customer through the suppliers. However, business information and consequent decisions flows from customers through the suppliers back to the firm. With the rising application of new technologies, business firms have been trapped in an ever rising competition. This has therefore driven the need to respond to all changing trends in order to conform to this competition. Information sharing can happen at different levels. It could be between companies or between companies and the suppliers who act as the bridge between the company and the customers. It is often essential that companies share their operational information so that each company can learn from the other. Companies are likely to learn from other company’s capabilities and difficulties. Since the suppliers serve as the bridge between the firms and customers, information sharing between the firm and suppliers is key.
The potentiality of any demand management is dependent on its ability to connect the current customer needs with future needs. This potential can easily be unlocked by ensure appropriate collaboration with suppliers (Thomas and Griffin, 1996, 13). The choice of the suppliers with whom to collaborate with is also key since not all suppliers are likely to have a significant impact the business. Rarely do companies have a close relationship with each other especially when they are within the same field. However, there are persons who relate to the different companies within a given field. In most cases, these individuals are the suppliers. When individuals from the firm and the suppliers interact socially, then a lot of information is share which when incorporated into the business it improves efficiency. Social interaction therefore serves as a great element in demand management through value improvement.
The purpose of this paper was to establish the key themes surrounding demand management. Three key themes were identified which include, demand process, configuration and social interaction. Demand process entails all processes involving the customers as well as the market with the aim of meeting the demands of the customers via value creation. The demand process is integrated with the supply process to allow for cost effectiveness in meeting the customer demands. Configuration on the other hand entails decisions on the number of customers which the firm can serve. It is often a process in which customers air their views which upon assessment are qualified to demands and consequently into project. Social interaction involves sharing of information between customers, suppliers and the firms. These themes are therefore key in ensuring effective demand management which is a key concept in supply chain management.
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