As a business owner, you know the significance of monitoring customer demand.
After all, this demand shows you the optimal inventory level for your shelves and warehouses.
Yet, the unpredictability of customer demand complicates this tracking process.
Yesterday, customers might have wanted cheap and easy services, but today they might prefer eco-friendly options.
With global economic and cultural changes, people's tastes keep shifting.
That's why accurately guessing and handling what customers want is crucial.
Demand management aids companies like yours in accurately forecasting demand. It also helps to align your supply more effectively with anticipated demand.
We'll clarify what demand management entails and guide you on enhancing it.
Demand management is a method businesses use to predict how much they'll need to sell certain products or services and figure out how to meet that need.
The aim is to improve the experience for both customers and businesses by identifying any gaps in demand and addressing them.
Demand management involves a variety of business tasks. They range from marketing and supply chain management to inventory planning and customer service.
For instance, a manufacturing company might use demand management as it helps to figure out how much raw material it will need in the upcoming quarter.
You may need to make minor adjustments to adapt to fluctuations in demand.
Here's an example to illustrate.
Imagine you operate a gifting delivery service, and your supplier notifies you they can't provide many Mother's Day cards this year.
That poses a significant issue since Mother's Day weekend is approaching, and you now have reduced inventory.
Yet, you can address this challenge by making minor adjustments across various tasks:
Effective demand management tactics can lead to cost savings, decreased workloads, enhanced customer experiences, and streamlined workflows.
Here's how it works:
Demand management is about making the most of current stock and ensuring timely buying or selling. It also involves using marketing to change how customers buy things.
If you have too much of something, persuade customers to buy more of it. If you have too little of something, offer discounts on other products to boost their sales.
Here's what the demand management process involves:
Predicting involves looking at past information to guess what future demand might be.
This is done using the predictive analysis technique.
It aims to assist companies in creating effective business plans and utilizing resources wisely.
There are three key stages in forecasting:
Demand planning involves organizing production, marketing, distribution, and sales strategies according to anticipated demand.
The primary goal of supply planning is to align supply with predicted demand, ensuring a timely balance.
This is essential for companies to generate revenue at opportune moments.
Within the realm of a manufacturing company, let's explore the various components of the demand planning process.
Companies use demand analysis as a research method to understand customer demand for particular goods or services.
It usually happens before introducing a new product or entering a new market. The demand analysis gives business managers insights into the feasibility of entering a target market and achieving anticipated profits.
For example, imagine a European power tool company considering expansion into North America.
They might use demand analysis to identify the regions with the strongest demand.
Additionally, they'll assess if their products suit the new market and if competitors offer superior alternatives.
They'll use this analysis to decide how to best use their resources, plan production, set prices, and advertise effectively.
The demand analysis process consists of four main components:
There are various methods for conducting demand forecasting, and the forecast may vary based on the method used.
So, employing many forecasting techniques is advisable to achieve a more precise and comprehensive prediction of future sales.
Here are four common types of demand forecasting:
Effective demand management plays a pivotal role in your supply chain operations.
For instance, decisions informed by demand management can influence the quantity of raw materials your supplier needs to get for you.
Moreover, a robust demand forecast for the upcoming months can dictate product quantities.
Hence, ensuring accuracy and involving input from various stakeholders across the supply chain are critical aspects of your demand management systems.
This involves engaging service providers, the sales team, the marketing team, and your delivery team.
Now, let's delve into some methods to enhance your demand management process.
Broadening your data sources can enhance demand estimation and provide a competitive edge.
While historical data is vital, supplementing it with fresh sources is essential.
Unique challenges and solutions exist at every supply chain stage, and incorporating this critical data can optimize forecasting.
Common primary data for demand management comprises:
New data sources may encompass contextual information. Examples of such contextual data include:
Leveraging new data sources can enhance forecasting accuracy.
Demand management isn't always precise.
Hence, involving key stakeholders in reviewing demand management forecasts is crucial.
This fosters internal confidence in the forecasts.
Collaborating with various stakeholders across the supply chain aids in refining forecasts.
For instance, the sales team may lack access to data available to the manufacturer, which can influence forecasts.
Enabling stakeholders to review and enhance forecasts can enhance the accuracy of your demand management process.
Suggestions, objections, and extra input can further refine forecasting accuracy and cut errors.
During the review process, ensure that the demand forecast aligns with both short-term and long-term goals, as well as strategic objectives.
Forecasts produced by demand management teams are equally vital for the supply side.
Demand forecasts also help to arrange buffer stocks and avoid stock outages by expeditiously placing purchase orders.
Use this data to select suppliers and schedule deliveries to align with customers' schedules.
Additionally, demand forecasts aid in preventing stock shortages and organizing buffer stocks by placing procurement orders promptly.
This approach ensures optimal inventory levels, avoiding both excess and insufficient stock.
Performance data assesses the performance of specific products, indicating how they fare in the market.
This information facilitates crucial adjustments to product features or functionalities.
Data can help in reshaping your sales or marketing approach. It will help to boost sales and enhance customer satisfaction and loyalty throughout a product's lifecycle.
For instance, a product manager overseeing the development of a specific product can use performance data to diagnose the reasons for its underperformance.
This enables them to put in place design alterations or adjust sales strategies to ensure the product appeals to customers.
Precise performance metrics enable you to assess the effectiveness of decisions guided by demand forecasts.
Performance analytics further allow you to adapt strategies in real-time, if desired outcomes are not achieved.
Having reliable data on your future demand helps in planning business expansion. It also minimizes the risk of backorders and subpar customer service.
Given the ever-changing consumer landscape, precise forecasts are essential for informed decision-making in your business.
Alongside production, transportation plays a big role in demand management.
How will you handle delivering your products to customers? How can you manage a surge in delivery demand effectively?
Thankfully, eLogii can enhance your delivery and business operations.
Our routing software enables you to generate and assign routes for many drivers efficiently.
Additionally, it optimizes delivery routes for the shortest distances between stops.
This minimizes drivers' time on the road, enabling them to complete more deliveries daily.
eLogii also facilitates proof of delivery collection and automatic delivery notifications to customers.