Thursday, 29 January 2015

What are the Differences between Supply Chain and Demand Chain Management?

Demand chain management is used to help companies to be proactive despite the volatile marketplace. The demand chain is focused on the market and the consumers during the planning, production and processing. When using this method the company is able to adjust quickly to the increase or decrease in demand changes.

There are four characteristics that stand out in the demand chain, which are different compared to the supply chain:
  • Coordination – Making sure everyone is on the same playing field is essential. All parties in the demand chain have to be able to make swift adjustments and react with the consumer demand.
  • Communication – As the demand chain needs to be agile the chain has to be able to communicate excellently and quickly.
  • Capacity – The right tools and the right teams are required to make the demand driven supply chain work effectively.
  • Commitment – The demand driven supply chain has a large number of stakeholders. Each needs to be fully committed and have the patience to wait for the demand chain to be fully implemented. All leaders have to be consistent and committed to ensure their responsibilities in the chain are met.

Characteristics Comparison
Supply Chain
Demand Chain
Design focus
Differed product differentiation
Collaborative filtering
Optimisation focus
Stock (product, service, idea)
Customer demand
Customer orientation
To satisfy every order, every day at the lowest cost
To attract and retain the most profitable customer
Data requirement
Past data extraction
Real time data
Defining characteristic
Regula ted process
Control mechanism
Trust mechanism
Positioning output
End of process
Throughout the process
Information flow
Push data management
Pull data management
End to end commitment
Process vs. function source
Aligned process managed through functions/ channel to consumer real need
All time/cost that does not directly touch product or satisfy goal
Any deviation from brand experience
(Source: Demand Chain Management Model 2013)

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