Demand Shaping and Inventory Management Quiz

Demand Management and Organizational Capacity Strategies

• Demand management is essential at various levels of supply and demand planning: long-term strategic needs, medium-term aggregate demand forecasting, and short-term demand forecasting.
• It involves analyzing the rate of consumption at different unit levels to match the level of precision to the time scale of the decision and increase forecasting accuracy.
• Demand management helps organize multiple sources of supply and demand in organizations with multiple plants and supply chain collaboration efforts.
• The APICS Dictionary defines demand management as a process that balances customer demand and a firm’s output capabilities, comprising planning demand, communicating demand, influencing demand, and prioritizing demand.
• It aims to influence the organization to produce products or services that satisfy actual customer requirements and expectations.
• Marketing terms such as order qualifiers and order winners relate to a product or service’s ability to compete for a customer’s business.
• Another purpose of demand management is to convince customers to purchase products and services in a manner that supports business requirements and organizational strategy profitably.
• Planning, communicating, influencing, and managing and prioritizing demand can be linked in several ways, including cycling through each component iteratively.
• Exhibit 1-21 shows how the demand management components are cyclical, with all components necessary for long- and medium-term planning but with the cycle shortened at the short-term operational level when demand management principles and technologies are implemented throughout the supply chain.
• Organizational capacity strategies focus primarily on one of the four components of demand management: planning demand, communicating demand, influencing demand, and managing and prioritizing demand.
• Four organizational capacity strategies include planning demand (fixed high capacity strategy), communicating demand (highly variable capacity strategy), influencing demand (moderately variable capacity strategy), and managing and prioritizing demand.
• Each strategy involves a different approach to meeting demand and capacity planning, with a focus on planning, communication, and influence to optimize capacity.

Test your knowledge on demand shaping and inventory management techniques used to influence customer purchasing behaviors and optimize operational requirements.