Demand Management
Demand management is how you oversee and manage customer demand. It involves understanding what your customers want, plus the necessary steps to fulfill those wants. This helps you plan for upcoming demand, and make sure you’re in a place to meet it. In this article, we’ll show you how to use demand management to serve your business.
Demand definition
In manufacturing, demand is the signal that drives everything else. It tells you what to make, how much to make, and when to have it ready. The challenge is that demand is rarely stable — it shifts with seasons, promotions, new product launches, and market conditions. Demand that is easy to forecast yesterday becomes a planning problem today.
There are several types of demand that manufacturers need to plan for: independent demand (driven directly by customer orders or market signals); dependent demand (derived from production bills of materials); and intermittent or lumpy demand (irregular orders that are difficult to forecast statistically). Each type requires a different planning approach — and the right demand management software should support all of them.
What is demand management?
Demand management is the process of managing customer demand. Essentially, demand management looks at the logistics of demand—what your customers want, and how to get it to them. When you’re managing a business, as we know in sedApta, planning ahead for demand means you can plan for potential bottlenecks and volatility, so you’re able to react more quickly and keep the supply chain in motion.
In the manufacturing process, demand management is often done after supply chain management (when you manage your procurement and suppliers) but before portfolio management (when you build out projects to act on your management plans). Demand management is very cross-functional, because you’re bridging the gap between consumer demand, supply teams, inventory and customer service.
Specifically, demand management means improving the accuracy of sales forecasts; for this reason, the adoption of software tools to support forecasting and production planning activities brings great benefits, such as:
- Improved service level
- Reduced stock and purchasing costs
- Optimized seasonal stock and distribution of production and logistics resources
- Optimized stock levels for each branch and warehouse.
Demand Management Strategy
Demand management strategies refer to the systematic planning and implementation of techniques to influence and control customer demand for a product or service. It involves various methods aimed at aligning demand with the available capacity, resources, and business objectives.
Effective demand management strategies are crucial for businesses to maintain operational efficiency, maximize revenue, minimize costs, and enhance customer satisfaction. They require continuous monitoring, analysis, and adjustment to adapt to changing market dynamics and customer preferences.
Demand Management: The sedApta Suite tool to benefit from production planning
Statistical Sales Forecast
Allows time series creation based on survey catalogues that can be configurated thanks to features such as:
- Business event management
- Customized aggregation level of time series
- Dynamic library of analysis algorithms
- Various statistical error measurements
- Automatic calculation functions of the algorithmic best fit for the time series considered with configurable parameters.
Collaborative Sales Forecast
Allows manual data forcing actions at different aggregation levels. Forcing on forecasts allows users to better manage:
- Special events
- Promotions
- Sampling
- Storage and management of special event effects for their rescreening
- Prompt interventions on each data aggregation level
- Forcing on past events to drive the forecast
- Forcing on forecast values
- Trend analysis for the distribution of forced values at high level on lower levels
- Forecasting support for the introduction of new items/areas/customers/markets
- Cloning/editing/mixing of historical values.
Statistical Sales Forecast
based on survey catalogues that can be configurated thanks to features such as:
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Business event management.
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Customized aggregation level of time series
-
Dynamic library of analysis algorithms.
-
Various statistical error measurements.
-
Automatic calculation functions of the algorithmic best fit for the time series considered with configurable parameters.
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About Sales & Operations Planning
Value creation across the planning horizon
Optimizing Sales & Operational Planning is key to enable companies to reach their business goals. If your company aims to improve performance and surpass the industry competition, it must be able to implement an efficient business S&OP process, which will only be as effective as the technology it utilizes.