Demand Chain Management - Demand-driven Execution

Demand-driven Execution

Demand chain management is the same as supply chain management, but with emphasis on consumer pull vs. supplier push. The demand chain begins with customers, then funnels through any resellers, distributors, and other business partners who help sell the company’s products and services. The demand chain includes both direct and indirect sales forces. Customers demand is hard to detect because out of stock situations (OOS) falsify data collected from POS-Terminals. According to studies of Corsten/Gruen (2002, 2008) the OOS-rate is about 8%. For products under sales promotion OOS rates up to 30% exist. Reliable information about demand is necessary for DCM therefore lowering OOS is a main factor for successful DCM.

Corsten and Gruen describe key factors for lowering OOS-rates:

• data accuracy
• forecast and order accuracy
• order quantity
• replenishment
• Capacity (time supply)
• Capacity (Packout) and Planogram Compliance
• Shelf Replenishment

Implementation of system supported processes leads to the new technology Extreme Transaction Processing described by Gartner Research. This technology allows to process the huge amount of data (POS, RFID) in real time providing information for store managers, shelve managers and the supply chain.