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    Demand Management

    Uploaded by

    Suparna Dv
    This document discusses demand management and demand planning in supply chain management. It defines demand management as setting marketing and sales plans based on projected demand and available products. Demand planning involves generating demand forecasts using historical and other information to analyze the impact of promotions, new products, and business plans. Demand can change due to market growth/decline, customers substituting a competitor's product, or customers moving up future purchases. Demand uncertainty makes forecasts less accurate, especially over longer forecast horizons. Aggregate forecasts are more accurate. The document also discusses reducing demand error in the supply chain through centralized demand information, reducing variability through fewer promotions, and reducing lead times through cross docking and EDI.

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    Attribution Non-Commercial (BY-NC)
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    Demand Management

    Uploaded by

    Suparna Dv
    171 views13 pages
    This document discusses demand management and demand planning in supply chain management. It defines demand management as setting marketing and sales plans based on projected demand and available products. Demand planning involves generating demand forecasts using historical and other information to analyze the impact of promotions, new products, and business plans. Demand can change due to market growth/decline, customers substituting a competitor's product, or customers moving up future purchases. Demand uncertainty makes forecasts less accurate, especially over longer forecast horizons. Aggregate forecasts are more accurate. The document also discusses reducing demand error in the supply chain through centralized demand information, reducing variability through fewer promotions, and reducing lead times through cross docking and EDI.

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    This document discusses demand management and demand planning in supply chain management. It defines demand management as setting marketing and sales plans based on projected demand and available products. Demand planning involves generating demand forecasts using historical and other information to analyze the impact of promotions, new products, and business plans. Demand can change due to market growth/decline, customers substituting a competitor's product, or customers moving up future purchases. Demand uncertainty makes forecasts less accurate, especially over longer forecast horizons. Aggregate forecasts are more accurate. The document also discusses reducing demand error in the supply chain through centralized demand information, reducing variability through fewer promotions, and reducing lead times through cross docking and EDI.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    171 views13 pages

    Demand Management

    Uploaded by

    Suparna Dv
    This document discusses demand management and demand planning in supply chain management. It defines demand management as setting marketing and sales plans based on projected demand and available products. Demand planning involves generating demand forecasts using historical and other information to analyze the impact of promotions, new products, and business plans. Demand can change due to market growth/decline, customers substituting a competitor's product, or customers moving up future purchases. Demand uncertainty makes forecasts less accurate, especially over longer forecast horizons. Aggregate forecasts are more accurate. The document also discusses reducing demand error in the supply chain through centralized demand information, reducing variability through fewer promotions, and reducing lead times through cross docking and EDI.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 13

    DEMAND MANAGEMENT

    What is demand management? Is it just managing the forecasts? Involves setting marketing and sales plans based on projected demand and available product. Why only marketing and sales plans? Is demand management carried out at regional basis?

    Why does demand change

    Market growth/decline: increase/decrease in consumption of product by existing or new customers Stealing share: when customers substitute the firms product for competitors product Forward purchasing: customer move up the future purchase.

    What is demand planning?

    Involves generating demand forecasts based on various historical and other pertinent information, it allows the users to analyze the impact of promotions, new product introductions, and other business plans

    Demand uncertainty

    The forecast is wrong But what about economy, trends, fads how do we accommodate them, are they a part of forecasts. The longer the forecast horizon, the worst the forecast Aggregate forecasts are more accurate.

    Where to Focus
    Labor Rs.700,000 Operating cost elements Sales Rs.5,000,000 Minus Cost of Goods Sold Rs.3,800,000 (Rs.3,685,000) Plus Net income Rs.400,000 (Rs.515,000) Divided by Sales Rs.50,00,000 Profit margin 8% (10.3%) Materials Rs.2,300,000 (Rs.2,185,000) Overhead Rs.800,000

    Other costs Rs.800,000

    What if we decrease materials cost by 5%? (or Rs.115,000)


    Return on Investments 10.0% (13.0%)

    Multiply

    Inventories Rs.500,000 (Rs.475,000) Account receivable Rs.300,000 Assets Current assets Rs.1,100,000 (Rs.1,075,000) Plus

    Sales Rs.5,000,000 Divided by Total assets Rs.4,000,000 (Rs.3,975,000) Asset turnover rate 1.25 (1.26)

    Cash Rs.300,000

    Fixed assets Rs.2,900,000

    Root Causes of Inventory

    2% 33% 37% Supply Var iance Demand Var iance Minimum St ock Pr ocess var iance

    28%

    DEMAND MANAGEMENT IN SUPPLY CHAIN MANAGEMENT

    Supply Chain Management

    Demand Management

    Marketing / Customer Relationship Management

    Demand Planning

    Sales Forecasting Management

    Demand Error In A Traditional Supply Chain


    Demand = 1,000 units End-use Customer 1,100 units 1,210 units

    1,331 units

    1,464 units

    Retailer

    Wholesaler

    Manufacturer

    Supplier

    Safety Stock

    + 10%

    + 10%

    + 10%

    + 10%

    Total Demand Error (Safety Stock) = 46.4%

    Dynamics of Supply Chain : Bull whip

    Demand Error In A Demand planning Supply Chain


    Demand = 1,000 units End-use Customer 1,100 units 1,100 units

    1,100 units

    1,100 units

    Retailer

    Wholesaler

    Manufacturer

    Supplier

    Safety Stock

    + 10%

    Total Demand Error = 10%

    But how?

    Reducing uncertainty: centralizing demand information, by giving each stage of supply chain complete information on customer demand. Reducing variability: cutting off on price promotions

    Reducing lead times:


    Types Order lead time: time to produce and ship the item Information lead time: time taken to process an order How to reduce? Cross docking EDI electronic data interchange

    Strategic partnerships

    This is done by the way information is shared, System itself determines how much inventory to keep and order.

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