Demand Management includes demand characteristics as well as planning and scheduling.
Demand Characteristics – If an item is scarce the alternatives are to raise price or offer longer lead time which will promote substitutes. A price that is too high or a lead time that is too long can result in a lost customer.
Ways to do some internal balancing:
production flexibility: produce what is in demand now (small batch)
inventory holding: safety stock – be careful here. Safety stock can reduce stock outs but comes at a cost.
marketing: sales incentives and discounts should be effectively communicated to reduce the bull whip effect
Elements of the Demand Management Process
When Supply and Demand are Mismatched the alternatives are to produce above demand to meet later spikes, increase capacity (add people, shifts, OT, equipment, outsourcing), plan to reduce demand (last resort).
S&OP Process Steps- take a moment to outline what happens at each step
- gather data
- demand planning meeting
- supply planning phase
- executive meeting
- Planning demand
- communicating demand
- influencing demand
- managing and prioritizing demand
S&OP IS ALL ABOUT COMMUNICATION!!
CPFR – collaborative planning, forecasting, and replenishment- collaboration process to get supply chain partners working together in these key areas: Strategy and planning, demand and supply management, execution and analysis. Several well-known companies utilize a CPFR program. See this website for more information on CPFR. https://www.gs1us.org/education-training/resource-library#/score/DESC/0/cpfr–/