Overview

Demand management is the link between manufacturing and the marketplace. It is a communication channel through which customers express their demands, and manufacturing 'guarantees' what it can commit to. Demand management encompasses forecasting, order delivery date promising, order entry and physical distribution.

Demand management must take into account factors that may affect demand, and therefore resources, such as economics political and fiscal, pricing strategies, product alignment, promotional opportunities and business objectives. Sources of demand such as service parts, intracompany requirements and pipeline stocking must also be taken into account. Understanding market requirements and the sources of demand is vital if manufacturing is to allocate resources effectively and efficiently.

Demand management is the spotlight on the integrity of manufacturing's ability to fulfil its commitments to the customer. It also demonstrates manufacturing's competence to plan and control all quantities and timings of demand placed on it. More precisely, it is a pointer towards the degree of management focus and hierarchical cooperation about the objective need for a planning cultural environment, where demand, both firm and forecast, only consumes available capacity. The better demand can be managed and the better resources can be planned and allocated, the better the 'honest' order promises that can be given to the sources of demand.

Managing demand involves accepting, or not, orders which may degrade honest order promising given to other customers. A customer base will comprise customers who have greater influence than others, most likely because of their particular volume of business. However, informal...