Demand Chain - Linking Demand and Supply Chains

Linking Demand and Supply Chains

The challenge of linking demand and supply chains has occupied many supply chain specialists in recent years; and concepts such as "demand-driven supply chains", customer-driven supply chains and sales and operations planning have attracted attention and become the subject of conferences and seminars.,

The core problem from the supply chain perspective is getting good demand plans and forecasts from the people driving demand: marketing, sales promotions, new product developments etc. The aim is to minimise out-of-stock (OOS) situations and excessive cost of supply due to spiky demand. Much attention has been drawn to the bullwhip effect. This occurs when demand patterns are extremely volatile, usually as a result of sales promotions, and it has the unintended consequences of driving up supply chain costs and service issues, due to supply capacity being unable to meet the spiky demand pattern and the entire chain becoming unstable as a consequence.

While the aim of linking the chains is clearly sensible, most of the people involved so far come from the supply side, and there has been a noticeable lack of input to these debates from Marketing and Sales specialists. Progress in modernising marketing and sales processes and information systems has also been slow; these systems and processes have been an obstacle to linking the two chains.