Re-thinking Demand Management

Managing customer demand in uncertain times


  • Emphasize proactive demand shaping based on analysis of the market and sensing the market potential. Design the demand shaping effort accordingly to realize the maximum potential benefit
  • Formalize the processes for measuring results of demand shaping efforts and taking systematic improvement steps based on the feedback. While measuring the impact of demand shaping, take care to ensure that the impact of seasonality and other external factors is factored out separately
  • Emphasize a unified customer experience to ensure that different touch points of the same customer have a uniform experience of the demand shaping parameters deployed
  • Equip customer facing teams with adequate information (product information, supply capability etc.) for effective and immediate decisions in shaping demand
  • Leverage customer segmentation to tailor demand shaping techniques to customer segments during a specific time period. If needed, reconsider customer segmentation criteria based on experience with the impact of demand shaping over a specific period of time

Collaborate within and beyond the organization boundary: Share the risk

It is not uncommon to see companies struggling to align order requirements submitted by sales, the supply capabilities and utilization optimization targets of their manufacturing units, the inventory targets of chief financial officers, and long-range forecasts from marketing. The first order of business from a collaboration perspective should be intra-company collaboration and planning, and then subsequently the extension of the collaboration arm to partners.

Short and long-term objectives of collaboration should be set outright. Short-term objectives include improving the trust factor and improving the accuracy and speed of information shared. The long-term perspective establishes the true essence of collaboration — a move from information sharing to risk sharing as trusted partners. Prominent examples are the semiconductor manufacturers who would under-invest in capacities if they are to bear the risk of idle capacity. This in turn impacts the buyers, since they don't get the product when they experience a higher demand from their customers. In the risk sharing strategy, the buyer might choose to purchase capacity options well ahead in time but exercise options only after observing demand. Since a part of the capacity risk is borne by the buyer, the semiconductor manufacturer is also encouraged for higher investment in capacity.

References

Primary Research: Conducted by Infosys Technologies Limited jointly with the Electronics Supply Chain Association (ESCA), the research involved interviews with 30 high-tech companies in the United States. Areas explored include practices on Demand Sensing, Demand Shaping and Demand Fulfillment. Respondent companies were categorized as Semicon Group (Semiconductor Manufacturer, Component Manufacturers), EMS Chain (Component Distributors, Contract Manufacturers) and OEM & Resellers (OEMs, Distributors and Retailers).

About the Authors: Romit Dey is a partner with Infosys Consulting, with specific focus on Customer Operations and Product Innovation. Over the last 12 years Dey has worked with clients on functional strategy, operations improvement and package-led business transformation initiatives across United States, Europe and India in consumer electronics, contract manufacturing, OEMs and distributor companies. He can be reached at romit_dey@infosys.com. Joy Prakash Somani is a senior principal with Infosys Consulting. Somani has consulted for several companies in discrete manufacturing and high tech industries in the United States and Canada in the areas of Supply Chain and Customer Operations. He can be reached at joyprakash_somani@infosys.com.

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