This is the 1st in the 3-part Strategic series.
For part 2 go HERE. For part 3 go HERE.
Leading firms understand that Demand Management is all about the customer: What are their needs, spoken or latent, and how do we procure or design just enough to sell to them? Demographic dynamics challenge the assumptions of what worked on the shelf last year, if it actually did work. Software is capable of recording and analyzing data within strict formats. But the reality is that life challenges a structural approach to knowledge. A great merchant or designer may be able to visualize a new product and who to sell it to, so most organizations need to understand the needs of their markets in a broader context.
New business models and relationships, such as multi-channel, trade promotions, etc., need to be mastered. We must understand the dynamics of our competition, new entrants with new products and new business models that seem to come from nowhere and suddenly sail to success. Customer preferences on these new channels: how they like to buy; how they like it packaged; how they pay for it; and how they hear about it, need to be examined. The Question is: Does your demand management process consider these and other issues beyond product?
Customers are bored with finding the same products and brands everywhere. Yet, there are economic and knowledge challenges to getting unique brands into the channel, to say nothing of aftermarket issues.
Manufacturers and Buyers
Buyers attending product shows around the globe can be exposed to many technical innovations, but how do they link these innovations to their understanding of their market?
How do they lead? When do they follow? How much will it cost to develop increased market share and meet demand? What is the channel strategy and what is the value of each channel partner? What is the true value, cost, of promotions? How to assess risks? How to retain price and profit through the channel?
And how do manufacturers know their customers? You can't have loyalty unless a customer actually knows, or even cares who you are! You may be category leader with your channel partner or retailers, but depending on them to create your relationship with your customer is a non strategy!
Statement: Demand management is not forecasting! Buying a forecasting package with 18th century math won't address the issues discussed above. Demand management techniques should include not only sensing the needs of the future, but understanding and assessing who your desired customer is today.
Some firms strive to understand their customers and the channels that their customers prefer. However, this knowledge does not become part of a consistent planning and execution platform within the business to constantly assess and refine if sales reflect the success or failure of your strategy.
In addition, business processes and systems strive to apply structure and consistency in order for computers to process data, but customer behavior and future demand live in the variable or unpredictable zone. In fact, most of the new rage products would never have been created by evaluating replenishment numbers.
As the knowledge and technology integration (visibility) capabilities increase, so does the expansiveness of the definition of the function. This is true in most supply chain areas, from sourcing, all the way through to customer care and loyalty.
The expanding role and cross-functional needs for business today: from marketing thru to supply chain; from merchandising to logistics, needs to consistently find process and technology that unites these activities in a way that opens new vistas of analysis, and learning about the customer and the customer experience preferences.
In this series we explore these highly integrated requirements for process and technology mastery.
Read the other two parts of this three part Demand Management STRATEGIC series:
|Multichannel marketing, Multichannel retail, Pricing and Promotions, are challenging both retailers and brand companies. Web retailing is entering a new phase. So is a store format, which must employ ... |
by Ann Grackin
Demand Management in the Second Decade
The Strategic View - Part 3
Supply Chains are just that - chains. That means that we have to orchestrate across the supply chain. Optimization ensures monitoring and visibility of the collaborative supply chain from retailer, distribution and manufacturing, and is key to successful Demand Management.
by Ann Grackin
We look forward to your comments, questions and contributions to this series.
To view other articles from this issue of the brief, click here.