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Customer needs analysis

A Closer Look at Demand Management and Its Core Components

What is demand management?

Demand management, also known as consumption management or strategic spend management, involves controlling and tracking the requirements of different business units and other internal purchasing operations. Engaging in demand management practices helps organizations to avoid gaps in supply and demand and also promote better supplier relationships. Demand management techniques also play a major role in addressing external spending factors, arranging purchase orders, and eradicating waste.

Core components of demand management

A demand management process can involve a wide range of disciplines depending on the unique processes of each organization. However, on a broader level, a demand management plan generally encompasses these core components:

Forecasting

There is more to forecasting than merely loading data into a spreadsheet, forming a basic view of projected sales based on that data, and then adjusting the business plan accordingly. Including multiple scenarios in the forecasting process prepares the company for virtually any unexpected twist or turn.

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Supply planning

Irrespective of the industry, the marketplace is highly dynamic. Furthermore, there may be constant changes in the supplier landscape, wherein new suppliers may spring up in the market or an existing supplier may go out of business. But if companies are not prepared to meet these changes and only react when they occur, chances are that they may get left behind among the other players in the market. By maintaining deep visibility into the capabilities and business health of all the suppliers, organizations can be positioned for continued success irrespective of what happens in the global business climate.

Demand analysis

Basing the demand decisions only based on the sales data may be a huge mistake for companies. Most ERP systems record sales based on when a product has been shipped and not based on when it was first ordered. Only by keeping an accurate view of order history can they paint a realistic picture of the company’s demand—and then strategize on ways to meet that demand year after year.

Sales and operations planning

The idea that the supply chain organization can operate in a silo, free from the input of executives is outdated. Over the past two decades, organizations that make and sell products have embraced sales and operations to involve a wider range of stakeholders in every supply chain decision—and to incorporate supply chain information and needs into every business decision. 

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Demand management

Demand planning vs demand management

Demand planning is the process of forecasting consumer demand for a company’s products or services well into the future. It is usually associated with sales, but it is closely tied to supply planning, which seeks to ensure that a company has enough supplies to meet the market demand. Ideally, a company’s demand-planning process helps maintain supply levels that meet demand or just slightly exceeds demand.

Demand management, on the other hand, is similar to demand planning, but demand management looks at consumer demand in the short term. Demand management is the oversight of current consumer demand to ensure that a business does not experience any loss of profits. Demand management is much more capable than demand planning when it comes to taking advantage of business opportunities in response to local events.

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market segmentation

Realizing Savings of 27% in Year for a CPG Company with the Help of Demand and Supply Analysis

Business Challenge 

The client, a leading CPG company in South America, was facing predicaments in effective supply and demand planning. With retailers increasingly producing and selling private label products and major competitors moving towards direct-to-consumer (D2C) models, the client, who continued to sell through distributors and retailers, faced challenges in creating best possible customer experience for end users. Also, complexities in their supply-demand planning, product development, sourcing, and production pressurized them to better manage inventory. With an appropriate demand and supply analysis, the client wanted to accurately manage product demands and fulfill customers’ demands seamlessly.

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Solutions Offered and Value Delivered 

By examining historical sales data, product orders, shipments, and current sales, the experts at Infiniti Research helped the client to make smart decisions about inventory and production levels. Infiniti’s demand and supply analysis also helped the client to respond to dynamic market demand and focus on customer-centric metrics. By focussing on consumer-centric metrics, the client was able to increase adaptability to demand volatility. Our demand and supply analysis solution subsequently helped them plan inventory supply against demand and helped them to reduce the company’s inventory levels. Infiniti’s demand and supply analysis solution the client was able to improve return on inventory assets, reduce excess inventory, and meet customers’ delivery requirements.

With Infiniti’s demand and supply analysis, the client was able to achieve a 13% reduction on unfilled orders and increase demand forecast accuracy. This helped the company to realize savings of over 27% in a year.

Mismatch in demand and supply planning can result in excessive inventory costs. Is your company facing the same challenge? Our demand and supply analysis solutions have helped various companies reduce excess inventory and meet delivery requirements. Request a FREE proposal to know how our solution can help your business.

What is Supply and Demand Analysis? 

Demand and supply analysis is a type of supply chain management process that analyzes customers’ needs to determine the capabilities of the supply chain. With the right process in place, management can match supply with demand proactively and execute the plan with minimal disruptions. The demand and supply analysis process is not limited to forecasting. It includes synchronizing supply and demand, increasing flexibility, and reducing variability. If the demand outstrips resources, businesses can improve production or alert consumers about the revised shipment times. If demand seems low, the sales and marketing team might develop promotions or push for a product launch.

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