A Guide to Understanding Demand Management

What is Demand Management

Businesses thrive when they can accurately predict how much demand there is for specific products or services from the market. From there, it's necessary to effectively manage the level of supplies they have on hand to fill those needs. For that reason, many companies have turned to automation platforms capable of helping them streamline all steps involved in the demand management process.

What is Demand Management?

The standard demand management definition that people come across when looking up the term is that it's a process that helps organization tailor their business capacity to meet fluctuations in demand. When done correctly, the demand management process encompasses marketing and supply chain management strategies.

By relying on well-developed demand management processes, companies can look at the mechanics of demand from every angle, including:

  • Supply
  • Changing customer trends
  • Current and future production capacity
  • Other competitors in the marketplace

When used effectively, demand management helps organizations find gaps in demand and make any necessary changes to their business strategy. It's about looking at things from the customer's point of view. That way, companies can better predict what they most desire and stay relevant.

Why is Demand Management Important?

importance of demand management in supply chain

Companies are better positioned to make accurate forecasts and meet customer demand with solid demand management strategies in place. That way, companies can provide better customer experiences that satisfy their desires. In addition, businesses are better able to spot new trends and adjust their business strategies.

A company's demand management process also helps them ensure that they don't overstock supplies held within their warehouses or come up short. In addition, accurately predicting customer demand can lead to more targeted and effective market strategies that reach the right audience.

Essentially, demand management means maintaining a cycle of analysis and improvement. Companies can look for new markets or ways to improve their yields from existing ones based on their understanding of how customers utilize products and services.

Organizations that learn to manage the intricacies of demand management can become top performers in their market. That means more sales and a bigger market share. In addition, a business can leverage those benefits into maintaining lower costs around marketing, supply, and sales.

Breaking Down the Demand Management Process

Below are some core components of the demand management process.

1. Making forecasts

Start by looking at customer buying habits to see where they might be headed in the future. There are a lot of different forecasting techniques companies can employ based on elements like:

  • Current trends
  • Sales projections
  • Customer behavior

Good forecasts rely on having accurate data on hand. As a result, many organizations use automated tools to collect and store information used in forecasting. Companies that learn to anticipate and plan for demand can gain an edge over other market competitors. In addition, better forecasts can make things easier for all supply chain operations.

2. Planning Supply

After making forecasts, businesses must communicate those details to shareholders. Based on that, a firm can start setting policies around supply levels. Planning out those requirements beforehand gives organizations an upper hand in ensuring they have enough lead time for replenishing supplies in their warehouses to meet customer demand. 

3. Analyzing Demand

Maintaining an accurate order history makes it easier for organizations to perform practical demand analysis. Another aspect of this part of the demand management process is making sure sales and marketing teams coordinate to plan new business opportunities. Additional research also helps companies deal with unexpected changes, like increased demand because of a competitor dealing with product shortages.

What are Some Challenges in Demand Management?

One of the biggest challenges for organizations during the demand management process is a lack of understanding of using automated algorithms. In addition, they may have trouble figuring out how to effectively set parameters on different replenishment systems.

Some companies run into problems collecting accurate sales information from different retailers. That's often due to retailers lacking any data structure around collecting information. Because of that, businesses have trouble coming up with accurate demand modeling to help companies figure out how to time various promotions.

Depending on what suppliers a business uses, there can be problems adjusting long lead times. For example, if a company in Wisconsin relies on parts from Taiwan, any delays that arise during the shipping process can impact supply. That makes it harder to meet a customer's delivery date, which affects their overall experience.

What Are Some Best Practices When It Comes to Demand Management?

Demand Management Best Practice

To start, shape your demand management process strategies to fit your organization. Establish performance measurements and indicators that help you track demand and figure out when to make changes. Expand your information sources so that you can accumulate more data to create better forecasts. In addition to looking at information like historical sales records, take time to review references like product specifications, purchase orders, and current business plans.

Establish a centralized database to make it easier to keep up with essential metrics for use throughout the organization. You can use it to set up iterative processes for your demand forecasts. In addition, you can keep up with important data points tied to:

  • Sales data
  • Orders
  • Competitor information
  • Shipments

Software like Integrify can help you map workflows to visualize each demand management process step. In addition, you can use the platform to create and manage the forms necessary to take in input from departments like sales, operations, production, and finance.

If you have a team designated for handling the demand management process, make sure they have clearly defined roles and responsibilities. Then, pull in representatives from company areas impacted by the results produced.

Let key stakeholders review your forecasts. They may have helpful feedback that impacts your predictions. Don't be afraid to question results that seem incorrect and remove any outliers that may be distorting your forecasts.

Check your forecasts against the inventory required to meet the projected demand. That way, you don't end up ordering too much product, which can raise costs – or not enough, which can cause you to miss deadlines.

Let Automation Help with Your Demand Management Needs

Integrify can help you automate tasks essential to the demand management process. For example, create custom dashboards that put all relevant information needed for forecasting right at your fingertips. You can also use it to send requests for information and set up custom input forms.

Find out more about how you can transform your company with Integrify by setting up a demo.

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