Demand management begins with an in-depth perception of existing business requirements, historical buying behavior and expected requirement for the service or product sourced by an organization. This research includes an assessment of purchase orders, service or product specifications and strategic business plans
- Available options for volume discounts
- Order timing's impact on
pricing
- Whether or not the best
suppliers are being utilized
- Precise attention to described
contract processes
Important Key point to Demand Management:-
1. Reshaping relationships with channel partners to ensure accurate demand forecasts.
2. Basing inventory allocations on real-time demand forecasts that incorporate information from all channels—both direct and indirect.
3.Ensuring that your own house is in order.
4. Ensuring the presence of accurate intelligence along with collaboration and automation.
5. Choosing demand management applications that address the unique challenges faced by the specific business.
What is Demand Management?
Demand Management is the process by which a business understands, predicts, and controls customer demand so that it can supply the right product, in the right quantity, at the right time.
The main goal of demand management is to avoid two problems:
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Producing too much (which causes wastage and high storage cost), and
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Producing too little (which causes shortages and unhappy customers).
In simple words:
Demand Management means planning business activities according to customer demand instead of reacting after problems occur.
Key Steps in Demand Management
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Demand Forecasting – Estimating future customer demand using past data and trends.
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Planning – Deciding how much to produce, store, and distribute.
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Monitoring – Comparing actual demand with planned demand.
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Adjustment – Making changes if demand increases or decreases unexpectedly.
Example of Demand Management
Example 1: Ice Cream Company
An ice cream company knows that:
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Demand is high in summer
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Demand is low in winter
How Demand Management helps:
| Season | Company Action |
|---|---|
| Summer | Increase production, hire extra workers, increase delivery |
| Winter | Reduce production, offer discounts, avoid excess stock |
If the company produces the same amount all year:
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In summer → shortage and lost sales
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In winter → wastage and higher costs
So the company manages demand to balance supply and profit.
Example 2: Online Shopping Website
During festival seasons like Diwali or Black Friday:
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Orders increase suddenly
Using demand management, the company:
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Stocks products in advance
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Hires temporary staff
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Expands delivery and server capacity
This prevents late delivery, website crashes, and out-of-stock problems.
Benefits of Demand Management
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Reduces wastage and storage cost
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Improves customer satisfaction
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Increases profitability
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Makes the supply chain more efficient
Conclusion
Demand Management is an important business strategy that helps companies prepare for future demand instead of reacting to problems later. By predicting demand and planning resources properly, businesses can improve efficiency, reduce losses, and provide better service to customers.
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