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Do You Know Where Your Demand Is?

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Demand chain management is the process of predicting consumer demand by analyzing the most up-to-date, accurate data available. Richard Tanler shows how businesses can use DCM to accurately and efficiently adjust supply, operations, and more.
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Once up, now down, the economy is tightening. As company after company reports earnings shortfalls, many executives are scratching their heads over why their performance could be so off the mark after they invested so heavily in technologies meant to avoid the very earnings surprises they are now experiencing. Some have plowed huge money into supply chain management, CRM, ERP, and e-procurement solutions to help companies meet their financial goals. But what these solutions have failed to help predict is customer demand, which drives just about everything else in the company.

Executives are increasingly becoming aware that the real driver of a successful, well-executed business plan is the demand chain: When you get a more accurate handle on your demand, then efficiencies in operations, procurement, and supply chain can flow from that knowledge. Efficiently managing a supply chain or inventories means nothing if too much product is produced because the demand forecast was out-of-whack, out-of-date, or out to lunch. It's not supply chain management; it's demand chain management (DCM) that's driving it all.

What does improving demand chain management really mean? Many vendors leave confusing messages about demand and instead want to orient customers around the supply chain to squeeze efficiencies out of operations or save a penny or two on a volume order of a needed part. Buying parts at a fractional cost-savings, however, might seem the height of wisdom at the time but can be a fatal decision if too much product is produced and the company is stuck carrying costly inventory month to month, leading to discounting and erosion of profit margins.

DCM is a process of viewing and analyzing the most recent and accurate data available—the data stored in the company's data warehouse—with granular data all the way down to the individual sales account level. Add to that an ability to create "what if" scenarios and to collaborate across business departments on these scenarios, and then the predictions of demand become more timely, more accurate, and more powerful than ever.

Clearer Vision

Traditional business intelligence software has done a good job of gathering historical data and reporting on past performance—that is, what was. And recent technologies allow for review of current data, or what is. Now, CEOs, CFOs, COOs, and sales and marketing VPs need test meaningful "what if" scenarios that help them create and meet forward-thinking business targets in ways never before possible. This evolves the business intelligence landscape into what is called "predictive intelligence," a persistently forward-thinking view of business performance metrics.

Turning the corporate lens toward a predictive view of the demand chain instead of the supply chain means getting real-time information on how much product will be sold. Then a company can send that intelligence throughout the organization and allow it to drive the success of the expensive supply chain and e-procurement applications in which it might have already invested.

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