Demand Management in Supply Chain Function in the Current Uncertain Times

The world isn't what it was a year ago!

Amongst other aspects, supply chain planning has taken a massive blow since the outbreak of the pandemic. While the markets are being opened again, and things are getting back on track, it would still take at least a year or more to make up for the losses and achieve supply chain agility (SCA). It's high time that the supply chain experts and planners find a solution to this unprecedented problem before everything turns into dust. And in all these challenging situations, demand management can be a ray of hope for everyone.

So, let's dig in more to understand the implications of demand management in the supply chain.

Did you know that 30% of companies don't analyze the source of supply chain disruptions?

Demand management in supply chain function is a process that involves forecasting the demand for goods and services, gathering valuable insights from sales, and providing better visibility into customer requirements. The ultimate goal is to strike a balance between the inventory levels, and customer demands to give them a better experience and avoid the surplus. In the process, a plethora of factors such as economic shift, market fluctuations, trade planning, global crisis, etc. can prove to be influential.

Over 62% of companies have limited visibility of their supply chain and 15% only has visibility on production. Meanwhile, 6% report full visibility, and 17% say they have extended supply chain visibility.

The VUCA World:
There's a never-ending challenge for supply chain planners to balance the demand and supply in the VUCA World, i.e. Volatility, Uncertainty, Complexity, and Ambiguity. The economic slowdown and the huge inventory write-offs are making things even worse. It has become difficult to deal with and find a proper game plan owing to the following conditions:

1. The elevating COVID-19 cases, government regulations, and consumer uncertainty have resulted in a decline in demand.
2. The sudden increase in demand and prices of certain commodities in some parts of the world.
3. While dealing with such staggering situations, planners have a hard time while working due to constraints such as remote working, illness, etc.

Around 36% of supply chain professionals say that one of the top drivers of their analytics initiative is the optimization of inventory management to balance supply and demand

How Demand Management can Assist in Improving the Present Circumstances?

1. In recent years, there has been an increasing demand for ERP software solutions to streamline the supply chain. Many organizations have shifted towards outsourcing the product distribution without affecting the revenues.

2. Demand management has the capability to enhance supply chain visibility to create a dynamic collaborative environment and effectively utilize the sales and promotions group to include customers too in the cycle.

3. The integration of the demand management systems with channel partners will ensure an accurate demand forecast. This will further provide assistance for Just-in-Time (JIT) manufacturing to produce the right goods in the right quantity at the right time.

4. Demand Management is more than just forecasting as it creates a bridge between the customers and the operational groups to meet their precise demands. This improves the customer experience and the revenue of the organization too.

5. The demand management applications address every unique challenge faced by the organization which traditional systems often lack. They relate forecasting to every aspect such as the economic indicators, competitive products, sales activity, consumer demand, etc.

How to Practice effective Demand Management?

1. Choose the Right Methodology & Software
Choosing the right methodology & a befitting Software (ERP) for an efficient demand tapping is of paramount importance. So, on your time series, you have Trend, Seasonality or both? Well, there needs a situational treatment. 

2. Collect and Manage Data
Only daily supply chain data will provide you the real-time visibility and gives a clear idea on the implementation and gaining insights for betterment. More the data, accurate the forecasts. An enhanced downstream day to day visibility through customer partnership could help get a tighter control on order point management. VMI eCommerce has a promise in this regard.

3. Design the Process Model
Define the demand management cycle by taking into consideration the market conditions, customer demands, and other factors as well. Consider your sales goals and financial planning to make things easier.

4. Execute and Monitor
A smarter vision of the demand management plan will let you monitor the performance of the organization on real-time analytics and historical data. Draft the ideal processes for execution by mitigating the errors.

Future of Demand Management in Supply Chain Function:

The digitization of demand management is the next step with advanced applications using machine learning and artificial intelligence in the supply chain which could provide real-time visibility, improve forecast-visibility, and much more. These applications will further help in restructuring the systems which have been considerably affected by the pandemic. They will also optimize the safety stocks, inventory levels if more such unanticipated demand variability-circumstances arise. The demand management system can be better implemented in a well-connected supply chain function which could boost profitability in shorter period of time.

Need a helping hand in restructuring demand management in your supply chain operations? Exxoptimus Partners can help you bridge the gap and practice demand management effectively. Our team can accompany you on this journey of making demand management sustainable for you in these uncertain times and accelerate your business to reach new heights!