CHAPTER 3: Bricks Matter

The New World of Demand Management: Demand Sensing, Shaping, and Translation
The global marketplace is volatile, fragmented, and dynamic. Supply processes are more mature than demand. There is a larger gap to fill in the redefinition of demand processes to be market driven than in any other area of supply chain management.

To become market driven, companies need to identify the right market signals, build sensing capabilities, define demand-shaping processes, and effectively translate the demand signal to create a more effective response. This approach makes the 30 years of technology and process thinking by the first- and second-generation supply chain global pioneers obsolete.

Demand management processes are challenging. They are more difficult to get right than supply. Talent is scarce and the processes are evolving. Organizationally, the work on demand processes is fraught with political issues. (Demand processes are more politically charged than supply processes.)

As a result, many companies often want to throw in the towel. They want to forget demand and only focus on the redesign of supply processes to become more reliable, resilient, and agile. The list of possible projects is long and often includes lean manufacturing, cycletime reduction, order management, or the redefinition of distribution center flows.

However, focusing only on supply has limited results. Supplycentric approaches can only impact business complexity. It cannot improve the potential of the supply chain as a complex system. Working supply processes in isolation to demand will drive up costs, increase working capital, and reduce asset utilization. The secret to building supply chain excellence is to build the right stuff in the demand management processes.