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Demand Management

Demand Management

What is demand management?
What determines ‘Good demand management’ is not subjective; there is a quantifiable measurement. It is defined as at least being at the ‘capable level’ of demand planning, at the top of Phase 1 of the Oliver Wight Maturity Model (Figure 1). At this level - the required standard for the Oliver Wight Class A milestone award - the right behaviours and processes have been established; people are accountable; and you can trust your demand plan.  Then (at the advanced level) the focus shifts to eliminating variability in that plan and deriving out cost from the business.

Oliver Wight Maturity Model

Fig1 . The Oliver Wight Maturity Model

Increasing global competition, volatile markets, rapidly evolving technology and the changing habits of consumers makes effective demand management an essential business component. Demand management should be the fundamental driver for business growth and strategy, with the needs and wants of the consumer running through the bloodline of the entire supply chain.

However, for many organisations demand management is consigned as a supply chain process and the demand plan itself viewed merely as a forecast.

The key to true demand management is that it must be led and managed by those in your organisation who are closest to the customer and have the greatest understanding of what is happening at the point of consumption; this is almost always the sales and marketing teams.

Market segmentation combined with customer collaboration to recognise and anticipate different consumer needs should be the focus. Once you really understand what is happening in your market place you can use situational analysis to help model different scenarios and identify the optimum demand plan. These findings should be shared with the rest of the supply chain in order to be fully integrated with your business strategy. Only then will your business be able to achieve effective long-term demand management, and be able to adapt to tomorrow’s consumer tastes, trends, trials and tribulations, ultimately preparing for the future, whatever lies ahead.