What is Demand Management?

Studies show that average perfect order fill rates vary drastically and are as low as 80% or less in some manufacturing industries. Others show that retailers experience an average of over 30% loss in sales due to markdowns and over 10% from stockouts on the shelf. What explains the wide range of perfect fulfillment, and why can't companies get closer to 100% fulfillment and 0% waste?

Increasing complexity and uncertainty in supply chains partially explain the root causes of these significant challenges to supply chains, but the environment alone does not explain all of the challenges. Demand Management is concerned with these questions and the core “disconnects” between the traditional supply chain management activities and the demand generation and management processes. The challenge is to develop integrated demand-supply management processes, involving the matching of supply and demand over all time frames - and during planning and in real-time as demand materializes.

Focus

The major question that was addressed by CTL's Demand Management activities was: "What strategies, principles, and methods can be leveraged to optimally match supply and demand over time?" The business processes and practices within the scope of the research include:

  • Optimally segmenting the customer base to offer tailored programs and differentiated services
  • Optimally leveraging the Sales and Operations Planning (S&OP) and Merchandise Planning and Allocation processes
  • Optimally promising a customer order fulfillment date
  • Using decision support and supply chain visibility information to enable the above processes.
  • Integrating the above processes

Read more about the focus of Demand Management

Results

Proceedings of Demand Management Symposium September 2004.
A symposium, "Demand Management: Integrating Demand and Supply in Real Time" was sponsored by the CTL on September 22-23, 2004, in Cambridge, MA. The symposium was intended to identify potential areas of research in DM.

Proceedings of Demand Management Symposium September 2006.
A second symposium, "Demand Management: Optimizing Supply and Demand over Time" took place on September 12-13, 2006, at MIT. The symposium participants included Supply Chain Exchange members and involved information-sharing on S&OP, customer service policies, and the building of demand-supply bridging processes.

Key members of the team

Dr. Larry Lapide, llapide@mit.edu