Introduction
Manufacturers and warehouse managers who have to match supply levels with consumer needs depend on an awareness of and control over demand. It guarantees timely delivery, therefore balancing inventory and production, and it forecasts consumer preferences. Demand management helps companies avoid supply chain bottlenecks and market instability, hence boosting efficiency and customer happiness.
We will explore demand management’s definition and relevance in this handbook. We will also look at the its process and underline how technological solutions may support this kind of planning. We will address all the key elements that support good demand management from demand prediction to influencing it.
Define Demand Management.
Demand management manages client needs for a company’s product. It predicts what customers want, when they’ll want it, and how to deliver it. Companies can avoid production or supply chain bottlenecks and market instability by planning.
Demand management comes after supply chain management, including procurement and suppliers, but before portfolio management in manufacturing. It spans consumer demand, supply teams, inventory, marketing, and customer service.
Demand management connects a company’s internal activities to the market. It creates interactions between operations and marketing to match market changes with a company’s strategy, production capacity, and consumer wants.
Demand management requires production management and project management tools. Award-winning project and portfolio management software ProjectManager allocates resources to maximise team productivity. Check your team’s allocation on the team page or color-coded workload chart. Any over- or under-allocated work can be swiftly balanced to keep the team productive and meet demand. ProjectManager is free to use today.
How Important Is Demand Management for Businesses?
Product manufacturers and sellers gain from client demand knowledge. It is essential for businesses to match client demand with inventories. Here are more reasons firms need demand management.
Helps companies set production budgets
Demand management lets organisations track and forecast market demand. This reduces costs from overproduction or stockouts. It also guides the production budget to match demand without overspending on inventory, labour, etc.
Helps Businesses Meet Customer Demand
Knowing consumer needs helps plan delivery. If client demand rises or falls, production planning must adjust or lose business or pay for undesirable inventory. Demand management improves consumer demand measurement.
Limits Inventory and Production
Excess inventory is expensive. That product must be stored, costing money on unsold items. A warehouse full of inventory that moves due to a balance between stock and demand is ideal. Demand management helps establish balance.
Supports Supply Chain Planning
Supply chain planning optimises production and delivery. It starts with raw resources, then completed goods, then customers. Clear customer demand will determine how much raw material is needed, how many things are manufactured, etc. Demand management is essential to this process and helps businesses spend only what they need.
Guides Workforce Planning
Managers can better plan by understanding existing and future worker needs via demand management. Managers better understand consumer demand and may deploy resources to meet it with the relevant people and capabilities.
Managing Demand
Demand management helps firms manage client demand. This requires a process. Demand management involves knowing what customers want and how to meet their demands. Follow these six demand management steps to plan for current and future demand.
Demand Prediction
A company’s demand prediction predicts client needs for its products. The demand dictates what changes or new goods are needed. It’s hard to predict what buyers desire and how much of each item. Many qualitative and quantitative strategies are used by organisations to estimate accurately. This approach uses data, software, and analytics, but their strengths and shortcomings should be considered.
Demand-planning
After forecasting, planning begins. Demand management includes demand planning, which helps a company produce its products to satisfy demand forecasts. This is part of the supply chain process and needs understanding horizon (demand plan timeframe), frequency (plan updates), and granularity. This enables for customer-focused demand planning.
Demand-Modeling
Demand modelling improves demand forecasting and planning. Demand modelling analyses client behaviour predictively. It examines customer propensity to buy a product and how pricing affects it. Customer behaviour is also analysed using historical data.
Demand Capacity
Demand capacity is a ratio of a company’s production to consumer demand. In manufacturing, demand capacity is measured to ensure output can satisfy product demand. Use sales records, customer feedback, inventory levels, production reports, or service logs to calculate this.
Sensing Demand
Demand sensing employs real-time data and analytics to predict what customers want, when they want it, and how much they want it. Sales history, inventory levels, customer behaviour, point-of-sale systems, internet sales platforms, and customer surveys are reviewed. Although imperfect, demand sensing can reduce forecast error by 50% and enhance accuracy by 20%.
Demand shaping
Demand shaping is a supply chain approach that uses price and marketing incentives, product replacements, and cost changes to sell specific items. A company can influence demand to match supply using these methods.
What does Demand manager do?
A demand manager or demand planning manager oversees the daily activities of the demand planning team and analyses customer and vendor demand to produce and refine projections.
Demand managers analyse buying, sales, and marketing methods to promote items and build enterprises. They analyse their effectiveness and improve accordingly.
Based on industry trends and demand patterns, the demand manager will create effective forecast models. Additionally, they’ll employ demand forecasting accuracy solutions. They are analytical and grasp superior mathematics and forecasting policies.
Finally,
Businesses that want to match production to consumer demand, maximise resources, and save costs must first effectively control demand. Accurate demand, planning, and demand management help businesses to improve their manufacturing efficiency, prevent surplus inventory, and better satisfy consumer wants. Key in this process are demand managers’ function and the application of sophisticated technological tools to make sure companies stay flexible and sensitive to changes in the market.
Adopting strong demand control strategies not only supports operational success but also helps to enable steady development. Including demand management into your company plan will help you to better predict market needs, simplify your supply chain, and finally raise customer happiness and profitability.
