Demand Management,

Order Management,
and
Customer Service

Logistics Management Group 4

Prof. Raymundo D. Miguel Aura Marie Baetiong
Emelina Blanco
26 September 2010 Montecarlo Manalo
1
Demand Management
 Defined as “focused efforts to estimate and
manage customers’ demand, with the
intention of using this information to shape
operating decisions.”

 Creation across the supply chain and its

markets of a coordinated flow of demand

4
Demand Management
 It is this disconnect between manufacturing
and the demand at the point of consumption
that attracts attention to demand
management.
 Any attention paid to demand management
will likely result in benefits flowing through
the supply chain.

5
(Phantom Demand)Supply-Demand
Misalignment

6
 Demand Management
 Independent demand
 Amount of product demanded by end-use customer of
the supply chain
 Derived demand
 A demand that is derived from what other companies in
the supply chain do to meet their demand from
immediate customer
 Dependent demand
 Demand for the component parts that go into a product
7
Demand Management
Derived vs. Independent Demand

 Demand error in a traditional supply chain 8

 Demand Management
Derived vs. Independent Demand

 Demand error in a Demand Planning Supply Chain 9

 Demand Management Objectives
 Demand Management in Supply Chain Management

10
Demand Forecasting
Sales and Operations Planning

11
 Traditional Forecasting:
Demand Forecasting
 A major component of demand management
is forecasting the amount of product that will
be purchased by consumers or end users.

 Sales forecasting is projecting into the future

of expected demand, given a stated set of
environmental conditions.

12
Sales Forecasting
Techniques

a. Qualitative
b. Time Series Analysis
c. Causal
d. Simulation Models

13
Sales Forecasting Models

a. Qualitative
 Grass roots
 Market research
 Panel consensus
 Historical analogy
 Delphi method

14
Sales Forecasting Models

a. Time Series Analysis

 Simple moving average
 Weighted moving average
 Exponential smoothing
 Regression analysis
 Box Jenkins technique
 Shiskin time series
 Trend projections
15
Sales Forecasting Models

a. Causal
 Regression analysis
 Econometric models
 Input/Output models
 Leading indicators

16
 Demand Management:
Related Issues
 Lack of communication between departments
results in little or no coordinated response to
demand information.
 Too much emphasis is often placed on
forecasts of demand with little attention paid
to collaborative efforts and strategic and
operational plans that need to be developed
from the forecasts.

19
Demand Management:
Related Issues
 Demand information is often used more for
tactical and operations purposes than for
strategic purposes.
 Primary emphasis should be on using demand
information to create likely scenarios of the
future as they relate to product supply
alternatives.
 Resulting business successes will be a
outcome of the better match of demand to
product availability.
20
21