Learning Objectives
12-1: Explain the importance of demand management for organizations, and identify the factors that affect it.
Demand management is the process of determining accurately what the customer wants and then coordinating the processes and procedures both within the firm and across its supply chain to meet demand in an efficient and timely manner. Effective demand management has numerous benefits including the mitigation of the bullwhip effect that causes unwanted inventories in the supply chain. The demand management process consists of demand forecasting, demand planning, and demand management. A wide range of economic, technological, and internal company factors can have an impact on customer demand.
12-2: Describe the challenges of global demand management and the strategies that can be used to address them.
The key challenges of global demand management include inventory availability in geographically dispersed regions and demand volatility. Some strategies that can be adopted to meet these challenges include using point-of-sale (POS) data, increasing the frequency of forecasting, collaborating and sharing timely information with supply chain partners, and coordinating their internal demand management activities.
12-3: Identify the unique nature of services demand management, and discuss the risks from excess and insufficient capacity.
The focus of services demand management lies in calculating the required service capacity well in advance of the demand for services and being flexible enough to use this available capacity effectively to meet the demand. Service providers face the risk of excess capacity in the form of idle resources, which add to costs without providing value, and insufficient capacity, which leads to poor service quality and prevents the business from growing if demand is not predicted accurately and managed well.
12-4: Propose and apply the four supply chain dimensions of customer service.
Customer service is the series of activities designed to enhance the level of customer satisfaction. There are four supply chain dimensions of customer service: (a) time— the ability to reduce cycle time in fulfilling customer orders; (b) dependability—consists of consistency, delivery safety, and order completeness; (c) communication—dialogue between the seller and the customer; and (d) convenience—making the product or service available when and where the customer wants it.
12-5: Discuss the sustainability and ethical issues in customer service.
As customers are becoming more knowledgeable about environmental issues such as global warming and carbon emissions, they do not want to purchase products and services that could harm our planet. In addition, customers demand that businesses act in an ethically and socially responsible manner. Consequently, companies that produce or deliver products and services that are environmentally friendly, and conduct business in an ethically and socially responsible manner, will have a positive influence on the consumers’ purchasing decisions.