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DEMAND MANAGEMENT AND CUSTOMER SERVICE

Demand Management

Defined as focused efforts to estimate and manage customers demand, with the intention of using this information to shape operating decisions.

Demand Management

Recent practice has been just the opposite, with the manufacturer determining the what, where, when, and how many of the sale. It is this disconnect between manufacturing and the demand at the point of consumption that attracts attention to demand management. Any attention paid to demand management will result in benefits flowing through the supply chain.

Demand Management

Demand management takes supply chain management to the next level by enabling an automated ecosystem that simultaneously maps demand forecasting against factors like supply restrictions, customer commitments, inventory counts, financial predictions, as well as patterns of behavior that can affect demand at any given time. Demand management is a more proactive approach than its predecessors relying on highly sophisticated quantitative analytics and advanced modeling techniques to preset tolerance levels, predict and pinpoint problem areas, monitor and adjust strategies dynamically, and achieve real-time visibility and synergy

Demand Management Objectives

Gathering and analyzing knowledge about consumers, their problems, and their unmet needs. Identifying partners to perform the functions needed in the demand chain. Moving the functions that need to be done to the channel member that can perform them most effectively and efficiently.

Demand Management Objectives

Sharing with other supply chain members knowledge about consumers and customers, available technology, and logistics challenges and opportunities. Developing products and services that solve customers problems. Developing and executing the best logistics, transportation, and distribution methods to deliver products and services to consumers in the desired format.

Demand Forecasting

A major component of demand management is forecasting the amount of product that will be purchased by consumers or end users. In the integrated supply chain all other demand will be derived from the primary demand. A key objective is to anticipate and respond to primary demand as it occurs in the marketplace.

Demand Forecasting

Demand forecasting is essentially a linear process of translating input assumptions into a forecast of expected sales; demand management, on the other hand, is a highly iterative process that involves driving to a revenue and profit target through prioritization of customers, channels, products, geographies and the demand stimulation programs available to the enterprise.

Demand Forecasting

Keeping inventory levels low, costs down and customers happy in a Web based, now largely global marketplace requires companies to proactively forecast and manage supply and demand dynamically supported by best-ofbreed techniques, technologies and practices and this calls for a delicate balance of art, science and technology.

Demand Forecasting

Numerous forces, some of which overlap, must come into play:

Internal The brand; market segment; product mix; corporate culture; sales performance; geographic presence, and customer satisfaction levels Economic The industry; the business climate; market share; financial performance; unemployment rates, and IT expenditures Technological Current install base; hardware/software changes; price/performance vs. competition, and benchmarks.

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From Planning to Managing

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Demand planning has enabled companies to more accurately forecast what their industry, market and customers will require. This is not a new concept, but for first-generation Internet-dependent enterprises, demand planning has permitted them to link and integrate processes across networks; enable closer collaboration among previously isolated parties; respond dynamically to market and consumer trends, and deliver a better, more rewarding experience across the value chain.

From Planning to Managing

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Armed with advanced tools, technologies and forecasting methodologies, businesses have honed their ability to view numbers and predict information within various contexts, model independent and dependent demand among products and channels, and generate statistically based forecasts based on the most recent data, causal factors and events. This has helped fulfill the demands of a more challenging customer base; better leverage past product performance; more effectively predict and manage replenishment; align price and profit margins; and maintain a leaner, more profitable supply chain overall.

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Forecasting and responding in real-time

Organizations looking for an effective demand management model should seek a Web-based solution that provides high levels of scalability, economy, usability, availability, synergy and functionality. Such a platform should support a real-time feedback loop that is designed to enable an enterprise to dynamically forecast against a number of variables, such as supply, customer orders, inventory, and financial objectives.

Collaborative Planning, Forecasting, and Replenishment

CPFR is recognized as a breakthrough business model for planning, forecasting, and replenishment. Uses available Internet-based technologies to collaborate from operational planning through execution. Developed by Wal-Mart and Warner-Lambert in 1995.

Collaborative Planning, Forecasting, and Replenishment

Emphasizes a sharing of consumer purchasing data among and between supply chain partners. Creates a direct link between the consumer and the supply chain.

Collaborative Planning, Forecasting, and Replenishment

The plan and the forecast are entered by suppliers and buyers into an Internet accessible system. Within established parameters, any of the participating partners is empowered to change the forecast. Only a few CPFR initiatives have been made public, but results are impressive.

A comprehensive solution

demand

management

A comprehensive demand management solution should enable a business to:

Synchronize global planning Forecast only the products and components that make sense from a profit and/or strategic perspective Utilize best-of-breed statistical forecasting techniques Employ a forecasting tool that balances performance and scalability Apply event-based planning Perform real-time data synchronization.

Employ rules-based modeling

A comprehensive solution

demand

management

Simplify multidimensional analysis with easy-to-use tools Afford a seamless workflow Benefit from an open, services-based, 64-bit architecture and a common Web interface Utilize industry-standard databases Employ automated, closed-loop, industry-specific workflows based on best practices Gather predictive intelligence with proactive demand indicators Enable more efficient collaboration with all internal stakeholders and external partners.

Order Fulfillment and Order Management

Order fulfillment activities differ as a supply chain matures through transactional to interactive to interdependent levels. Typical Order fulfillment cycle involves five activities:
Order

Transmission Order Processing Order Selection Order Transportation and Customer Delivery

Order Fulfillment and Order Management

Order-management systems represent the principal means by which buyers and sellers communicate information relating to individual product orders and is key to operational efficiency and customer satisfaction.

Order-Management Functions

Customer Service

Customer service is often the key link between logistics and marketing.

Customer Service

Defining customer service

In

terms of levels of product In terms of types of customer support/service In terms of levels of involvement In terms of complexity of customer service

Customer Service

Elements of Customer Service

Time
Dependability

Cycle

time Safe delivery Correct orders

Communications

Convenience

Customer Service: Performance Measures

Traditional

New

% availability in base units Speed and consistency Response time to special requests Speed, accuracy, and message detail of response Response and recovery time requirements Response time, quality of response

Orders received on time Orders received complete Orders received damage free Orders filled accurately Orders billed accurately

Customer Service: Overview

If the basics of customer service are not in place, nothing else matters. Customers may define service differently. All customer accounts are not the same. Relationships are not one dimensional. Partnerships and added value can lock up customers.

Stockouts

Four possible outcomes from a stockout

Customers

wait Back orders Lost sales Lost customers