Demand management has functional responsibilities and interfaces that include:
- Product Development and brand management
Demand management serves as an intermediary between product development and brand management, marketing, sales, and operations so that all of these functions plans, communications, influences, and priorities are coordinated to maximize and satisfy demand.
Demand management interfaces with product development, marketing, sales and operations to help the organization and the extended supply chain integrate the right services into their product offerings. Rather than producing and then selling, demand management helps organizations generate product-service packages that can meet specific customer segment needs in terms of what is delivered and when it is delivered.
Product development and brand management
- Product development or design and brand management are typically long-term strategic tasks that can benefit from integration with demand management because it promotes the balanced needs of the supply chain.
- Elements that are not perceived as a value to the customer should be eliminated from the design of the product-service package. This is one of the principles of lean thinking: If the customer does not understand or value the results of a supply chain activity, it is not value-added and can be eliminated.
- Demand management can influence product and brand management to consider the processes throughout the whole supply chain, such as the ease and expense of sourcing raw materials for product, manufacturing it, warehousing it, transporting it, displaying it, servicing it, repairing it, returning it, and reusing or recycling it at the end of its life.
- Demand management can provide a collaborative venue for multiple departments or supply chain stakeholders to provide input, consider the feasibility of options or strategies, and, after some amount of iteration, arrive at the product-service package and brand design with the highest potential for mutual profit.
- Demand management relies on marketing because marketing must provide input to the demand plan. The input is necessary because marketing and sales are the people who are closest to prospects and customers.
- Marketing staff are responsible for finding potential customers and identifying needs the company can solve, creating and maintaining customer demand with communications and promotions, helping to refine product design and packaging to meet customer needs, forecasting demand throughout a product’s life cycle, and pricing products and services to be affordable and profitable at the same time.
- Demand management interfaces with marketing in the medium and short term to tailor demand to meet available capacity. Tailoring demand from a marketing perspective includes setting existing and potential customers’ expectations regarding the types of demand that the organization will accept or consider. That is, if customer know the rules of the game they will be more likely to happily work within those rules. This helps avoid situations such as frustrating a potential customer by having to reject and unprofitable customization request that likely took some time to prepare.
- Another way demand can be tailored is by raising or lowering prices either semi-permanently or through promotions. Price reductions can simulate demand in times of excess capacity, and returns to regular pricing can help when there is insufficient capacity.
- Sales departments work with customers on a daily basis and make delivery promises. The primary interface demand management has with sales is to implement the demand plan commitments regarding influencing or prioritizing demand. Another interface is ensure that the demand plan supports the organizational strategy.
- Salespersons desire to eliminate order backlogs, which means sales staff is not typically interested in minimizing inventories. Their priority is to increase sales by providing the right quality of supplies at the right place. For similar reasons, a high priority for sales is time to market, especially if the product or service must be ready for a particular selling season, be presented at a trade show or convention, or beat the competition to the market. Demand management can champion these requirements with product development, marketing, and operations.
- Demand management can work with sales to manage demand in such ways as convincing product and brand management to raise or lower prices for ordering in bulk or for accepting delayed shipments. Another role for demand management is to educate sales staff on the limitations of product development, marketing and operations.
- Interfacing between the demand side of the organization and manufacturing planning and control is a vital task for demand management because most operations professionals are highly specialized.
- Demand management can also facilitate the understanding between operations and the other parties at S&OP meetings, such as by accommodating the requirements of profitable customer segments in production plans.