Demand management is a unified procedure of controlling and tracking business unit requirements and internal purchasing operations. Firms use demand management systems to address external spending factors, arrange purchase orders and eliminate waste.
Demand management centers on the volume of products that are purchased from providers, rather than individual product pricing, in contrast to conventional sourcing initiatives. Demand management is sometimes refereed to as consumption management or strategic spend management.
The demand management process deals with balancing customer requirements with the abilities of the supply chain. This involves forecasting demand and synchronizing it with production, procurement and distribution capabilities. A strong demand management process helps firms be more proactive to anticipated demand and more reactive to unanticipated demand.
A significant element of demand management is uncovering methods to decrease demand variability and enhance operational flexibility. Reducing demand variability assists consistent planning and lowers costs. The demand management process can have a monumental effect on the financial gain of an organization, its consumers and suppliers. Enhancing the process can have extensive implications. Having the right product on the shelves will increase sales and customer loyalty. Better forecasting can reduce raw materials and finished goods inventories.